BISICHI MINING PLC
Results for the year ended
31 December 2017
Summary:
Reported
EBITDA: |
£3,700,000 (2016: £2,400,000) |
Adjusted EBITDA: |
£5,800,000 (2016: £1,500,000) |
· Improved
performance in the second half of the year from Black Wattle, the
group’s South African coal mining operation.
·
Investment in significant infrastructure improvements allowed Black
Wattle to mine at a sustainably higher rate of production and
achieve an increased yield from its washing plant.
· Black
Wattle was able to benefit from the significantly improved coal
prices during the second half of the year.
· UK
property portfolio continues to perform well with average rental
yields for the portfolio remaining stable during the year.
· In light
of the strong results achieved for the year, a special dividend of
1p (2016: Nil) per share proposed in addition to a final dividend
of 3p (2016: 3p) taking full year dividend to 5p (2016: 4p) per
share.
· Dividend
yield of 7.1% at year end share price.
Chairman, Sir Michael Heller,
comments:
"The permanent infrastructure improvements at Black Wattle will
have a positive impact on the returns achievable from our existing
coal reserves and should open up new opportunities to mine similar
coal reserves in the surrounding area. Accordingly, we remain
confident about the ability of our South African coal mining
operations to continue to contribute to our group earnings and cash
generation for the foreseeable future.”
For further information, please call:
Andrew Heller or Garrett Casey, Bisichi Mining PLC 020 7415
5030
BISICHI MINING PLC
ANNUAL REPORT 2017
Building on success at Black
Wattle
Earnings before interest, tax, depreciation and
amortisation (EBITDA) of
£3.7million
(2016: £2.4 million)
Operating profit before depreciation, fair value
adjustments and exchange movements (Adjusted EBITDA) of
£5.8million
(2016: £1.5 million)
Dividend yield of
7.1%
at year end share price.
Strategic report
The directors present the Strategic
Report of the company for the year ending 31
December 2017. The aim of the Strategic Report is to provide
shareholders with the ability to assess how the Directors have
performed their duty to promote the success of the company for the
collective benefit of shareholders.
Chairman’s Statement
For the year ended 31 December
2017, we are very pleased to report that your company
achieved earnings before interest, tax, depreciation and
amortisation (EBITDA) of £3.7million (2016: £2.4 million) and
operating profit before depreciation, fair value adjustments and
exchange movements (Adjusted EBITDA) of £5.8million (2016:
£1.5million).
These results can be attributed mainly to an improved
performance in the second half of the year from Black Wattle, our
South African coal mining operation. The decision by your
management in the first half of the year to invest in significant
infrastructure improvements to the mine’s washing plant has allowed
Black Wattle to mine at a higher rate of production and achieve an
increased yield. In addition, the mine was able to benefit from
significantly improved coal prices during the second half of the
year. The permanent infrastructure improvements at Black Wattle
will have a positive impact on the returns achievable from our
existing coal reserves and should open up new opportunities to mine
similar coal reserves in the surrounding area. Accordingly, we
remain confident about the ability of our South African coal mining
operations to continue to contribute to our group earnings and cash
generation for the foreseeable future.
In other mining news, we are pleased to announce the appointment
of Millicent Zvarayi to the Board of Black Wattle Colliery (Pty)
Ltd. Since 2012, Ms Zvarayi has had a major role in the management
of Black Wattle’s export sales via Richards Bay Coal Terminal under
the Quattro programme. As a member of its Board, we look forward to
Ms Zvarayi’s direct contribution to the development of Black
Wattle’s long term
strategy.
A fuller explanation on the performance of our mining operations
for the year can be found within the Mining Review and Financial
& Performance Review sections of this report.
The company’s UK retail property portfolio, which underpins the
group and which is managed actively by London & Associated Properties Plc,
continues to perform well, with average rental yields for the
portfolio remaining stable during the year. A fuller explanation of
the portfolio’s valuation results and financial position are
discussed in the Financial & Performance Review and Directors
report.
Looking forward, management is currently investigating other
major investment opportunities in both the mining sector and the
domestic property sector and is conserving the group’s cash
reserves accordingly. This is in line with the company’s stated
strategy of balancing the high risk of our mining operations with a
dependable cash flow from our UK property investment
operations.
Finally, in light of the strong results achieved for the year,
your directors recommend a special dividend of 1p (2016: Nil) per
share in addition to a final dividend of 3p (2016: 3p). Both
dividends will be payable on Friday 27 July
2018 to shareholders registered at the close of business on
6 July 2018. This takes the total
dividends per share for the year to 5p (2016: 4p). Based on the
2017 year end share price, this represents a 7.1% yield.
On behalf of the Board and shareholders, I would like to
thank all of our staff for their hard work during the course
of the year.
Sir Michael Heller
Chairman
20 April 2018
Principal activity, strategy & business model
The company carries on business as a mining company and its
principal activity is coal mining in South Africa. The company’s strategy is to
create and deliver long term sustainable value to all our
stakeholders through our business model which can be broken down
into three key areas
1 Acquisition &
investment |
2 Production &
sustainability |
3 Processing &
marketing |
Strategy
The group actively seeks new opportunities to extend the life of
mine of its existing mining operations or develop new independent
mining operations in South Africa. The group aims to achieve this
through new commercial arrangements and the acquisition of
additional coal reserves nearby to or independent from our existing
mining operations. |
Strategy
The group strives to mine its coal reserves in an economical and
sustainable manner that delivers long term value to all our
stakeholders. |
Strategy
The group seeks to achieve additional value from its mining
investments through the washing, transportation and marketing of
coal into both the domestic and export markets. |
In addition to the three key areas outlined above, we seek to
balance the high risk of our mining operations with a dependable
cash flow from our UK property investment operations. The company
invests in retail property across the UK. The UK property portfolio
is managed by London &
Associated Properties PLC whose responsibility is to actively
manage the portfolio to improve rental income and thus enhance the
value of the portfolio over time.
Mining Review
The strong performance of Black Wattle, our South African coal
mining operation, can be attributed to increased mining production
from our opencast reserves and the successful completion of coal
infrastructure improvements to our washing plant. This allowed the
group to benefit from the higher prices achievable for our coal,
particularly in the second half of the year.
Production and operations
For the first half of 2017 production at Black Wattle was
impacted by higher than expected seasonal rains as well as ongoing
stone contamination issues at our opencast areas. Overall, the mine
achieved mining production of 582,000 metric tonnes (2016 H1:
795,000 metric tonnes) during the first half of the year. The stone
contamination issues affected both yield and mining production
through the washing plant, thus impacting on sales volumes and
earnings in the first half of the year.
During the second half of the year, further development of our
opencast areas and the successful completion of infrastructure
improvements to our washing plant allowed the mine to increase
mining production to 714,000 metric tonnes (2016 H2: 465,000
tonnes) during the period. In addition, the completion of
infrastructure improvements assisted in reducing the stone
contamination through the washing plant and increasing our overall
yield.
As a result of the higher production in the second half of the
year, overall mining production from Black Wattle increased in
2017, with total mining production for the year of 1.30million
metric tonnes (2016: 1.26million metric tonnes). As part of Black
Wattle’s mining plan, the opencast areas that were mined in 2017
will continue to be mined throughout 2018. We expect mining
production levels achieved in the second half of 2017 to be
maintained in 2018.
As mentioned in the Chairman’s statement, the infrastructure
improvements completed at Black Wattle in 2017 will continue to
have a positive impact on the returns achievable from our remaining
reserves. In addition, the new machinery will allow Black Wattle to
mine or buy in coal from similar reserves within the area that may
be affected by stone contamination issues thus broadening the scope
of new opportunities for the group to extend the life of mine of
our mining operations in South
Africa.
Main trends/markets
During 2017 management continued to sell coal into both the
export and domestic market. Black Wattle’s export sales were via
Richards Bay Coal Terminal and primarily under the Quattro
programme, which allows junior black-economic empowerment coal
producers direct access to the coal export market via Richards Bay
Coal Terminal. We would like to thank Vunani Limited, our
black economic empowered shareholders at Black Wattle, for managing
and developing this opportunity.
Although International coal prices fell in the first half of
2017, a surge in the international price in the second half of the
year ensured an overall improvement in prices achievable for our
coal for the year. At the beginning of 2017, the average weekly
price of Free on Board (FOB) Coal from Richards Bay Coal Terminal
(API4) was $85. During the year the
API4 price steadily decreased to around $70 by May 2017
before rebounding and steadily increasing to $95 by the end of the year. A less volatile South
African Rand against the US Dollar ensured that the movements in
the Rand prices achievable for our export coal as a result of
exchange movements remained limited. Overall, the group achieved an
average Rand price of R773 per tonne of export coal sold in 2017
from the mine compared to R632 in 2016.
In the domestic market, a continued high demand impacted
positively on prices achievable for our coal in 2017. In the last
quarter of 2016, the average Rand price achievable per tonne of
coal sold was R276 increasing to R390 by the second quarter of 2017
and over R400 by the last quarter of 2017. Overall, the group
achieved an average price of R397 per tonne of domestic coal sold
in 2017 compared to R279 in 2016. Looking forward, domestic prices
are expected to remain stable as long as the shortage of coal in
the domestic market continues.
Overall, the increase in group revenue, compared to the prior
year, can mainly be attributed to the higher volume of coal sold at
Black Wattle as well as the higher prices achieved for our
coal.
Looking forward into 2018, both the export and domestic coal
prices have continued to remain stable at these higher levels and
we continue to see strong demand for our coal in both markets.
Sustainable development
Black Wattle continues to strive to conduct business in a safe,
environmentally and socially responsible manner. Some highlights of
our Health, Safety and Environment performance in 2017:
• Black Wattle Colliery recorded one Lost Time Injury
during 2017 (2016: One).
• No cases of Occupational Diseases were recorded.
• Zero claims for the Compensation for Occupational Diseases
were submitted.
We continue to adhere and make progress in terms of our Social
and Labour Plan and our various BEE initiatives. A fuller
explanation of these can be found in our Sustainable Development
Report on page 8.
Prospects
Looking forward to 2018, management will focus on maintaining
production at the higher levels achieved in the second half of 2017
and increasing our life of mine through the acquisition of
additional reserves. With strong demand and improved prices
achievable for our coal, we believe the group is in a strong
position to achieve significant value from our South African mining
operations in 2018.
Andrew Heller
Managing Director
20 April 2018
Sustainable development
The group is fully committed to ensuring the sustainability of
both our UK and South African mining operations and delivering long
term value to all our stakeholders.
Health, Safety & Environment
(HSE)
Black Wattle is committed to creating a safe and healthy working
environment for its employees and the health and safety of our
employees is of the utmost importance.
HSE performance in 2017:
- No cases of Occupational Diseases were recorded.
- Zero claims for the Compensation for Occupational Diseases were
submitted.
- No machines operating at Black Wattle exceeded the regulatory
noise level.
- Black Wattle Colliery recorded one Lost time Injury during
2017.
In addition to the required personnel appointments and
assignment of direct health and safety responsibilities on the
mine, a system of Hazard Identification and Risk Assessments has
been designed, implemented and maintained at Black Wattle.
Health and Safety training is conducted on an on going basis. We
are pleased to report all relevant employees to date have received
training in hazard identification and risk assessment in their work
areas.
A medical surveillance system is also in place which provides
management with information used in determining measures to
eliminate, control and minimise employee health risks and hazards
and all Occupational Health hazards are monitored on an on going
basis.
Various systems to enhance the current HSE strategy have been
introduced as follows:
- In order to improve hazard identification before the commencing
of tasks, mini risk assessment booklets have been distributed to
all mine employees and long term contractors on the mine.
- Dover testing is conducted for all operators. Dover testing is
a risk detection and accident reduction tool which identifies
employees’ problematic areas in their fundamental skills in order
to receive appropriate training.
- On going basic rigging training is being conducted for all
washing plant personnel.
- A Job Safety Analysis form is utilised to ensure effective
identification of hazards in the workplace.
- In order to capture and record investigation findings from
incidents, an incident recording sheet is utilised by line
management and contractors.
- Black Wattle Colliery utilises ICAM (Incident Cause Analysis
Method).
- On going training on conveyor belt operation is being conducted
with all employees involved with this discipline.
Black wattle colliery social and
labour plan (slp) progress
Black Wattle Colliery is committed to true transformation and
empowerment as well as poverty eradication within the surrounding
and labour providing communities.
Black Wattle is committed to providing opportunities for the
sustainable socio-economic development of its stakeholders, such
as:
- Employees and their families, through Skills Development,
Education Development, Human Resource Development, Empowerment and
Progression Programmes.
- Surrounding and labour sending communities, through Local
Economic Development, Rural and Community Development, Enterprise
Development and Procurement Programmes.
- Empowering partners, through Broad-Based Black Economic
Empowerment (BBBEE) and Joint Ventures with Historically
Disadvantaged South African (HDSA) new mining entrants and
enterprises.
- The company engages in on going consultation with its
stakeholders to develop strong company-employee relationships,
strong company-community relationships and strong company-HDSA
enterprise relationships.
The key focus areas in terms of the detailed SLP programmes were
updated as follows:
- Implementation of new action plans, projects, targets and
budgets were established through regular workshops with all
stakeholders.
- A comprehensive desktop socio-economic assessment was
undertaken on baseline data of the Steve Tshwete Local Municipality
(STLM) and Nkangala District Municipality (NDM).
- Black Wattle has drawn up a new SLP Plan for the next five
years (2017 – 2021).
- The current Black Wattle Colliery Local Economic Development
(LED) programmes were upgraded, and new LED projects were selected
in consultation with the key stakeholders from the STLM.
- An appropriate forum was established on the mine and a process
initiated for the consultation, empowerment and participation of
the employee representatives in the Black Wattle Colliery SLP
process.
- Included within the new SLP Plan is a new LED project which
includes the upgrading of Phumelele Secondary School in the
Rockdale Township. The primary focus is to build additional
facilities, including classrooms to cater for the growing
population in the area.
- Black Wattle Colliery has concluded extensive work on various
Agricultural projects as well as the E-Bag Recycling projects. The
E-Bag Recycling project aims to minimize the environmental impact
of post-consumer Polyethylene Terephthalate plastic (PET) on the
South African landscape. The project was awarded the PET
Entrepreneur award for 2013. To date in 2017, the E-Bag recycling
project has initiated up to 70 local community jobs in the region.
Black Wattle Colliery has entered into a joint venture project with
Enviroserve Waste Management to further develop and ensure the
future sustainability of this project.
- Various upgrades were initiated at the Evergreen School nearby
to Black Wattle including the erection of new toilet facilities for
the boys and girls, which formed part of the mines portable skills
development programme for our employees.
Social, community and human rights
issues
The group believes that it is in the shareholders’ interests to
consider social and human rights issues when conducting business
activities both in the UK and South
Africa.
Environment & Environment
Management Programme
South
Africa
Under the terms of the mine’s Environmental Management Programme
approved by the Department of Mineral Resource (“DMR”),
Black Wattle undertakes a host of environmental protection
activities to ensure that the approved Environmental Management
Plan is fully implemented. In addition to these routine activities,
Black Wattle regularly carries out environmental monitoring
activities on and around the mine, including evaluation of ground
water quality, air quality, noise and lighting levels, ground
vibrations, air blast monitoring, and assessment of visual impacts.
In addition to this Black Wattle also does quarterly monitoring of
all boreholes around the mine to ensure that no contaminated water
filters through to the surrounding communities.
Black Wattle is fully compliant with the regulatory requirements
of the Department of Water Affairs and Forestry and has an approved
water use licence.
Black Wattle Colliery has substantially improved its water
management by erecting and upgrading all its pollution control dams
in consultation with the Department of Water Affairs and
Forestry.
A performance assessment audit was conducted to verify
compliance to our Environmental Management Programme and no
significant deviations were found.
United
Kingdom
The group’s UK activities are principally property investment
whereby we provide premises which are rented to retail businesses.
We seek to provide those tenants with good quality premises from
which they can operate in an efficient and environmentally sound
manner.
Procurement
Black Wattle is a level 7 contributor to B-BBEE and has achieved
a 50% BEE procurement recognition level. In compliance with the
Mining Charter and the Mineral and Petroleum Resource Development
Act, Black Wattle has implemented a BBBEE-focussed procurement
policy which strongly encourages our suppliers to establish and
maintain BBBEE credentials. At present, BBBEE companies provide
approximately 88 percent of Black Wattle’s equipment
and services.
We closely monitor our monthly expenditure and welcome potential
BBBEE suppliers to compete for equipment and service contracts at
Black Wattle.
Employment
As part of Black Wattle’s commitment to the South African
government Mining Charter, the company seeks to:
- Expand opportunities for historically disadvantaged South
Africans (HDSAs), including women, to enter the mining and minerals
industry and benefit from the extraction and processing of the
country’s resources;
- Utilise the existing skills base for the empowerment of HDSAs;
and
- Expand the skills base of HDSAs in order to serve the
community.
In addition Black Wattle is committed to achieving the goals of
the South African Employment Equity Act and is pleased to report
the following:
- Black Wattle Colliery has exceeded the 10 percent women in
management and core mining target.
- Black Wattle Colliery has achieved 12 percent women in core
mining.
- 94 percent of the women at Black Wattle Colliery are HDSA
females.
Black Wattle Colliery has successfully submitted their annual
Employment Equity Report to the Department of Labour.
In terms of staff training some highlights for 2017
were:
- 11 employees were trained in ABET (Adult Basic Educational
Training) on various levels;
- An additional 5 disabled women continued their training on ABET
level one and two.
- 2 HDSA Females have completed and qualified in their respective
apprenticeships at the mine.
- Black Wattle had several of the staff of Silver Solutions CC, a
black owned private contractor on the mine, trained to become
competent to perform plastic pipe welding. The mine makes extensive
use of their services in this area.
Employment terms and conditions for our employees based at our
UK office and at our South African mining operations are regulated
by and are operated in compliance with all relevant prevailing
national and local legislation. Employment terms and conditions
provided to mining staff meet or exceed the national average. The
group’s mining operations and coal washing plant facility are
labour intensive and unionised. During the year no labour disputes,
strikes or wage negotiations disrupted production or had a
significant impact on earnings. The group’s relations to date with
labour representatives and labour related unions continue to remain
strong.
In terms of directors, employees and gender representation, at
the year end the group had 6 directors (6 male, 0 female), 7
senior managers (6 male, 1 female) and 196 employees (143 male, 53
female).
Green House Gas reporting
We have reported on all of the emission sources required under
the Companies Act 2006 (Strategic Report and Directors’ Reports)
Regulations.
The group has employed the Operational Control boundary
definition to outline our carbon footprint boundary. Included
within that boundary are Scope 1 & 2 emissions from coal
extraction and onsite mining processes for Black Wattle Colliery.
We have not measured and reported on our Scope 3 emissions sources.
Excluded from the footprint boundary are emission sources
considered non material by the group, including refrigerant use
onsite.
We have used the GHG Protocol Corporate Accounting and Reporting
Standard (revised edition) and a methodology adapted from the
Intergovernmental Panel on Climate Change (2006) to calculate
fugitive emissions from surface coal mining activities. Further
emission factors were used from UK Government’s GHG Conversion
Factors for company Reporting 2017.
The group’s carbon footprint: |
2017
CO2e
Tonnes |
2016
CO2e
Tonnes |
Emissions source: |
|
|
Scope 1 Combustion of fuel & operation of facilities |
15,575 |
11,860 |
Scope 1 Emissions from coal mining activities |
22,683 |
22,171 |
Scope 2 Electricity, heat, steam and cooling purchased for own
use |
11,210 |
8,530 |
Total |
49,468 |
42,561 |
Intensity: |
|
|
Intensity 1 Tonnes of CO2 per pound sterling of revenue |
0.0013 |
0.0019 |
Intensity 2 Tonnes of CO2 per tonne of coal produced |
0.038 |
0.034 |
Principal risks & uncertainties
PRINCIPAL RISK |
PERFORMANCE AND MANAGEMENT OF THE
RISK |
COAL PRICE
RISK
The group is exposed to coal price risk as its future revenues will
be derived based on contracts or agreements with physical off-take
partners at prices that will be determined by reference to market
prices of coal at delivery date.
The group’s South African mining operational earnings are
significantly dependent on movements in both the export and
domestic coal price.
The price of export sales is derived from a US Dollar-denominated
export coal price and therefore the price achievable in South
African Rands can be influenced by movements in exchange rates and
overall global demand and supply.
The domestic market coal prices are denominated in South African
Rand and are primarily dependant on local demand and supply. |
The group primarily
focuses on managing its underlying production costs to mitigate
coal price volatility as well as from time to time entering into
forward sales contracts with the goal of preserving future revenue
streams. The group has not entered into any such contracts in 2017
and 2016.
The group’s export and domestic sales are determined based on the
ability to deliver the quality of coal required by each market and
Quattro programme quotas, together with the market factors set out
opposite. Volumes of export sales achieved during the year were
primarily dependent on the mine’s ability to produce the higher
quality of coal required for export as well as allowable quotas
under the Quattro programme and overall global demand. The volume
of domestic market sales achieved during the year were primarily
dependant on local demand and supply as well as the mine’s ability
to produce the lower overall quality of coal required. |
MINING RISK
As with many mining operations, the reserve that is mined has the
risk of not having the qualities and accessibility expected from
geological and environmental analysis. This can have a negative
impact on revenue and earnings as the quality and quantity of coal
mined and sold by our mining operations may be lower than
expected. |
This risk is managed by engaging
independent geological experts, referred to in the industry as the
“Competent Person”, to determine the estimated reserves and their
technical and commercial feasibility for extraction. In addition,
management engage Competent Persons to assist management in the
production of detailed life of mine plans as well as in the
monitoring of actual mining results versus expected performance and
management’s response to variances. The group continued to engage
an independent Competent Person in the current year. Refer to page
6 for details of mining performance. |
CURRENCY
RISK
The group’s operations are sensitive to currency movements,
especially those between the South African Rand, US Dollar and
British Pound. These movements can have a negative impact on the
group’s mining operations revenue as noted above, as well as
operational earnings.
The group is exposed to currency risk in regard to the Sterling
value of inter-company trading balances with its South African
operations. It arises as a result of the retranslation of Rand
denominated inter-company trade receivable balances into Sterling
that are held within the UK and which are payable by South African
Rand functional currency subsidiaries.
The group is exposed to currency risk in regard to the
retranslation of the group’s South African functional currency net
assets to the Sterling reporting functional currency of the group.
A weakening of the South African Rand against Sterling can have a
negative impact on the financial position and net asset values
reported by the group. |
Export sales within the
group’s South African operations are derived from a US
Dollar-denominated export coal price. A weakening of the US Dollar
can have a negative impact on the South African Rand prices
achievable for coal sold by the group’s South African mining
operations. This in turn can have a negative impact on the group’s
mining operations revenue as well as operational earnings as the
group’s mining operating costs are Rand denominated. In order to
mitigate this, the group may enter into forward sales contracts in
local currencies with the goal of preserving future revenue
streams. The group has not entered into any such contracts in 2017
and 2016.
Although it is not the group’s policy to obtain forward contracts
to mitigate foreign exchange risk on inter-company trading balances
or on the retranslation of the group’s South African functional
currency net assets, management regularly review the requirement to
do so in light of any increased risk of future volatility.
Refer to the ‘Financial Review’ for details of significant currency
movement impacts in the year. |
NEW RESERVES AND
MINING PERMISSIONS
The life of the mine, acquisition of additional reserves,
permissions to mine (including ongoing and once-off permissions)
and new mining opportunities in South Africa generally are
contingent on a number of factors outside of the group’s control
such as approval by the Department of Mineral Resources, the
Department of Water Affairs and Forestry and other regulatory or
state owned entities.
In addition, the group’s South African operations are subject to
the government Mining Charter.
Any regulatory changes to the Mining Charter, or failure to meet
existing targets, could adversely affect the mine’s ability to
retain its mining rights in South Africa. |
The maintenance of
compliance with permits includes factors such as environmental
management, health and safety, labour laws and Black Empowerment
legislation; as failure to maintain appropriate controls and
compliance may in turn result in the withdrawal of the necessary
permissions to mine. The management of these regulatory risks and
performance in the year is noted on page 17 under the headings
environmental risk, health & safety risk and labour risk.
Additionally, in order to mitigate this risk, the group strives to
provide adequate resources to this area including the employment of
adequate personnel and the utilisation of third party consultants
competent in regulatory compliance related to mining rights and
mining permissions
The group also continues to actively seek new opportunities to
expand it mining operations in South Africa through the acquisition
of additional coal reserves and new commercial arrangements with
existing mining right holders. |
POWER SUPPLY
RISK
The current utility provider for power supply in South Africa is
the government run Eskom. Eskom continues to undergo capacity
problems resulting in power cuts and lack of provision of power
supply to new projects. Any power cuts or lack of provision of
power supply to the group’s mining operations may disrupt mining
production and impact on earnings. |
The group’s mining operations have
to date not been affected by power cuts. However the group manages
this risk through regular monitoring of Eskom’s performance and
ongoing ability to meet power requirements. In addition, the group
continues to assess the ability to utilise diesel generators as an
alternative means of securing power in the event of power
outages. |
PRINCIPAL RISK |
PERFORMANCE AND MANAGEMENT OF THE
RISK |
FLOODING
RISK
The group’s mining operations are susceptible to seasonal flooding
which could disrupt mining production and impact on earnings. |
Management monitors water levels on
an ongoing basis and various projects have been completed,
including the construction of additional dams, to minimise the
impact of this risk as far as possible. |
ENVIRONMENTAL
RISK
The group’s South African mining operations are required to adhere
to local environmental regulations. Any failure to adhere to local
environmental regulations, could adversely affect the mine’s
ability to mine under its mining right in South Africa. |
In line with all South
African mining companies, the management of this risk is based on
compliance with the Environment Management Plan. In order to ensure
compliance, the group strives to provide adequate resources to this
area including the employment of personnel and the utilisation of
third party consultants competent in regulatory compliance related
to environmental management.
To date, Black Wattle is fully compliant with the regulatory
requirements of the Department of Water Affairs and Forestry and
has an approved water use licence. Further details of the group’s
Environment Management Programme are disclosed in the Sustainable
development report on page 9. |
HEALTH & SAFETY
RISK
Attached to mining there are inherent health and safety risks. Any
such safety incidents disrupt operations, and can slow or even stop
production. In addition, the group’s South African mining
operations are required to adhere to local Health and Safety
regulations. |
The group has a comprehensive Health
and Safety programme in place to mitigate this risk. Management
strive to create an environment where Health and safety of our
employees is of the utmost importance. Our Health & Safety
programme provides clear guidance on the standards our mining
operation is expected to achieve. In addition, management receive
regular updates on how our mining operations are performing.
Further details of the group’s Health and Safety Programme are
disclosed in the Sustainable development report on page 8. |
LABOUR RISK
The group’s mining operations and coal washing plant facility are
labour intensive and unionised. Any labour disputes, strikes or
wage negotiations may disrupt production and impact earnings. |
In order to mitigate
this risk, the group strives to ensure open and transparent
dialogue with employees across all levels. In addition, appropriate
channels of communication are provided to all employment unions at
Black Wattle to ensure effective and early engagement on employment
matters, in particular wage negotiations and disputes.
Refer to the ‘Employment’ section on page 12 for further
details. |
CASHFLOW
RISK
Commodity price risk, currency volatility and the uncertainties
inherent in mining may result in favourable or unfavourable
cashflows. |
In order to mitigate this, we seek
to balance the high risk of our mining operations with a dependable
cash flow from our UK property investment operations which are
actively managed by London & Associated Properties PLC. Due to
the long term nature of the leases, the effect on cash flows from
property investment activities are expected to remain stable as
long as tenants remain in operation. Refer to page 22 for details
of the property portfolio performance. |
PROPERTY VALUATION
RISK
Fluctuations in property values, which are reflected in the
Consolidated Income Statement and Balance Sheet, are dependent on
an annual valuation of commercial properties. A fall in UK
commercial property can have a marked effect on the profitability
and the net asset value of the group as well as impact on covenants
and other loan agreement obligations.
The economic performance of the United Kingdom, including the
potential impact of the United Kingdom leaving the European Union
(“Brexit”), may impact the level of rental income, yields and
associated property valuations of the group’s UK property
assets. |
The group utilises the
services of London & Associated Properties PLC whose
responsibility is to actively manage the portfolio to improve
rental income and thus enhance the value of the portfolio over
time. In addition, management regularly monitor banking covenants
and other loan agreement obligations as well as the performance of
our property assets in relation to the overall market over
time.
Management continue to monitor and evaluate the impact of Brexit on
the future performance of the Group’s existing UK portfolio. In
addition, the group assesses on an ongoing basis the impact of
Brexit on the group’s banking covenants, loan obligations and
future investment decisions.
Refer to page 22 for details of the property portfolio
performance. |
Financial & performance review
The movement in the Group’s Adjusted EBITDA from £1.5million in
2016 to £5.8million in 2017 can mainly be attributed to the higher
prices achieved for our coal and increased mining production at
Black Wattle offsetting the impact of higher mining and washing
costs. As we continue into 2018, the group’s financial position
remains strong and we expect to achieve significant value from our
existing mining operations as noted in the Mining Review.
EBITDA, adjusted EBITDA and mining production are used as key
performance indicators for the group and its mining activities as
the group has a strategic focus on the long term development of its
existing mining reserves and the acquisition of additional mining
reserves in order to realise shareholder value. Mining production
can be defined as the coal quantity in metric tonnes extracted from
our reserves during the period and held by the mine before any
processing through the washing plant. Whilst profit/(loss) before
tax is considered as one of the key performance indicators of the
group, the profitability of the group and the group’s mining
activities can be impacted by the volatile and capital intensive
nature of the mining sector. Accordingly, EBITDA and adjusted
EBITDA are primarily used as key performance indicators as they are
indicative of the value associated with the group’s mining assets
expected to be realised over the long term life of the group’s
mining reserves. In addition, for the group’s property investment
operations, the net property valuation and net property revenue are
utilised as key performance indicators as the group’s substantial
property portfolio reduces the risk profile for shareholders by
providing stable cash generative UK assets and access to capital
appreciation.
Key performance indicators
The key performance indicators for the group are: |
2017
£’000 |
2016
£’000 |
For the group: |
|
|
Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted EBITDA) |
5,819 |
1,516 |
EBITDA |
3,734 |
2,415 |
Profit/(loss) before tax |
1,485 |
346 |
For our property investment
operations: |
|
|
Net property valuation (excluding joint
ventures) |
13,245 |
13,245 |
Net property revenue (excluding joint
ventures) |
1,125 |
1,084 |
For our mining activities: |
|
|
Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted EBITDA) |
4,894 |
755 |
EBITDA |
2,811 |
1,204 |
|
Tonnes
‘000 |
Tonnes
‘000 |
Mining production |
1,296 |
1,260 |
The key performance indicators of the group can be
reconciled as follows: |
Mining
£’000 |
Property
£’000 |
Other
£’000 |
2017
£’000 |
Revenue |
36,300 |
1,125 |
34 |
37,459 |
Mining and washing costs |
(25,664) |
- |
- |
(25,664) |
Other operating costs excluding depreciation |
(5,742) |
(228) |
(6) |
(5,976) |
Operating profit before depreciation, fair
value adjustments and exchange movements (adjusted EBITDA) |
4,894 |
897 |
28 |
5,819 |
Exchange movements |
(256) |
- |
- |
(256) |
Fair value adjustments |
- |
(13) |
- |
(13) |
Gain on disposal of other investments |
- |
- |
3 |
3 |
Operating profit excluding depreciation |
4,638 |
884 |
31 |
5,553 |
Share of (loss)/profit and write off’s in joint
venture |
(1,827) |
8 |
- |
(1,819) |
EBITDA |
2,811 |
892 |
31 |
3,734 |
Net interest movement |
|
|
|
(459) |
Depreciation |
|
|
|
(1,790) |
Profit/(loss) before tax |
|
|
|
1,485 |
The key performance indicators of
the group can be reconciled as follows: |
Mining
£’000 |
Property
£’000 |
Other
£’000 |
2016
£’000 |
Revenue |
21,703 |
1,084 |
28 |
22,815 |
Mining and washing costs |
(16,184) |
- |
- |
(16,184) |
Other operating costs excluding
depreciation |
(4,764) |
(348) |
(3) |
(5,115) |
Operating profit before
depreciation, fair value adjustments and exchange movements
(adjusted EBITDA) |
755 |
736 |
25 |
1,516 |
Exchange movements |
449 |
- |
- |
449 |
Fair value adjustments |
- |
445 |
12 |
457 |
Operating profit excluding
depreciation |
1,204 |
1,181 |
37 |
2,422 |
Share of (loss)/profit in joint
venture |
- |
(7) |
- |
(7) |
EBITDA |
1,204 |
1,174 |
37 |
2,415 |
Net interest movement |
|
|
|
(284) |
Depreciation |
|
|
|
(1,785) |
Profit/(loss) before tax |
|
|
|
346 |
Adjusted EBITDA is used as a key indicator of the trading
performance of the group and its operating segments representing
operating profit before the impact of depreciation, fair
value adjustments, gains/(losses) on disposal of other investments
and foreign exchange movements. The group’s operating segments
include its South African mining operations and UK property
investments. The performance of these two operating segments are
discussed in more detail below.
The group achieved EBITDA for the year of £3.7 million (2016:
£2.4million). The movement compared to the prior year can mainly be
attributed to increased operating profits before depreciation from
our mining activities of £4.9million (2016: £1.2million) offset by
the group’s share of losses in joint venture mining assets of
£1.8million (2016: £nil). The share of losses in joint ventures can
be attributed to the write off of our joint venture mining
investment in Ezimbokodweni Mining (Pty) LTD of £1.8million which
is discussed in further detail below.
Depreciation for the year, related to our mining operations,
remained stable at £1.8million (2016: £1.8million) with the group
reporting an overall profit before tax of £1.5million (2016:
£0.3million).
SOUTH AFRICAN MINING OPERATIONS
Performance
The key performance indicators of the
group’s South African mining operations are presented in
South African Rand and UK Sterling as follows: |
South African Rand |
UK Sterling |
2017
R’000 |
2016
R’000 |
2017
£’000 |
2016
£’000 |
Revenue |
622,691 |
432,481 |
36,300 |
21,703 |
Mining and washing costs |
(440,241) |
(322,505) |
(25,664) |
(16,184) |
Operating profit before other operating costs and
depreciation |
182,450 |
109,976 |
10,636 |
5,519 |
Other operating costs (excluding
depreciation) |
|
|
(5,742) |
(4,764) |
Operating profit before depreciation, fair
value adjustments and exchange movements (adjusted EBITDA) |
|
|
4,894 |
755 |
Exchange movements |
|
|
(256) |
449 |
Share of loss in joint ventures |
|
|
(1,827) |
- |
EBITDA |
|
|
2,811 |
1,204 |
|
2017
‘000 |
2016
‘000 |
Mining production in tonnes |
1,296 |
1,260 |
|
2017
R |
2016
R |
Revenue per tonne of mining production |
480 |
343 |
Mining and washing costs per tonne of mining
production |
(340) |
(256) |
Operating profit per tonne of mining production
before other operating costs and depreciation |
140 |
87 |
A breakdown of the
quantity of coal sold and revenue of the group’s South African
mining operations are presented in metric tonnes and South African
Rand as follows: |
|
|
|
|
|
|
|
Domestic
‘000 |
Export
‘000 |
2017
‘000 |
Domestic
‘000 |
Export
‘000 |
2016
‘000 |
Quantity of coal
sold in tonnes |
1,267 |
155 |
1,422 |
1,219 |
147 |
1,366 |
|
Domestic
R’000 |
Export
R’000 |
2017
R’000 |
Domestic
R’000 |
Export
R’000 |
2016
R’000 |
Total
Revenue |
502,818 |
119,873 |
622,691 |
339,611 |
92,870 |
432,481 |
|
R |
R |
R |
R |
R |
R |
Revenue per tonne
of coal sold |
397 |
773 |
438 |
279 |
632 |
317 |
The quantity of coal sold can be defined as the quantity of coal
sold in metric tonnes from the mine in any given period. Revenue
per tonne of coal sold can be defined as the net revenue price
achieved per metric tonne of coal sold.
Total revenue for the group’s mining operations increased for the
year from R317 per tonne of coal sold in 2016 to R438 in 2017,
attributable to the average price increases achieved in both the
domestic and export market. As a result of the overall higher
mining production, the quantity of coal sold for the year increased
to 1.422million tonnes (2016: 1.366million tonnes). Overall, the
revenue for the group’s South African mining operations increased
in the year to R622.7million (2016: R432.5 million).
The overall increase in cost per tonne from R256 per tonne to
R340 per tonne can mainly be attributed to the movement of mining
operations to new opencast reserves at Black Wattle which have
higher inherent mining costs. As a result of the higher mining cost
per tonne and the increase in total mining production, total mining
and washing costs for the group increased from R322.5million in
2016 to R440.2million in 2017.
Other operating costs (excluding depreciation) of £5.7million
(2016: £4.8million) include general administrative costs as well as
administrative salaries and wages related to our South African
mining operations that are incurred both in South Africa and in the UK. These costs are
not significantly impacted by movements in mining production and
the increase during the year can mainly be attributed to exchange
movements on the translation of South African Rand costs into
Sterling. Overall costs were in line with management’s expectations
and local inflation.
Overall, the group’s South African mining operations achieved an
adjusted EBITDA of £4.9million (2016: £0.8million) attributable to
the increase in mining production for the year and higher prices
achievable for our coal offsetting the higher mining cost per tonne
of our new opencast reserves.
The group’s EBITDA for mining activities of £2.8million (2016:
£1.2million) for the year, in comparison to the result achieved for
adjusted EBITDA were negatively impacted by the share of loss in
joint ventures of £1.8million (2016: £nil) related to the write off
of our investment in Ezimbokodweni Mining (Pty) Ltd as well as an
exchange rate loss of £0.3million in the current year compared to
an exchange rate gain of £0.4million incurred during the prior
year. These exchange movements can mainly be attributable to the
retranslation of Rand denominated inter-company trade receivable
balances with our South African mining operations that are held
within the UK.
A further explanation of the mines operational performance can
be found in the Mining Review on page 6.
Other mining Investments
During the year the group wrote off its £1.8million investment
in Ezimbokodweni Mining (Pty) Limited (“Ezimbokodweni”) made up of
a £1.4million loan (2016: £1.4million) and a £0.4million (2016:
£0.4million) joint venture investment.
The carrying value of the investment was dependent upon the
completion of the acquisition of the Pegasus coal project (“the
project”) in South Africa.
Although a proposed sale and purchase agreement had been negotiated
and a deposit paid for the project, the conclusion of the
transaction had been delayed pending the commercial transfer of the
prospecting right from the current owners of the project to
Ezimbokodweni. Although the group has always remained committed to
completing the transaction, previous negotiations to complete the
commercial acquisition of the project had been beset by various
delays outside of its control and at the beginning of 2017, the
current owners of the project notified Ezimbokodweni that they no
longer wished to divest the project. More recently, the group was
notified that an agreement was reached between the current owners
of the project and the directors of Ezimbokodweni for the deposit
for the project to be returned and any further negotiations with
Ezimbokodweni to acquire the project to be terminated. Although, a
legal claim by the group has been issued against Ezimbokodweni and
its representatives, in order for the group to recover some of the
investment, the Board has considered it to be appropriate to write
off the investment in full in the 2017 year end.
Uk property investment
Performance
The group’s portfolio is managed actively by London & Associated properties plc and
continues to perform well with net property revenue (excluding
joint ventures) across the portfolio increasing marginally during
the year to £1.125million (2016: £1.084million). The property
portfolio was externally valued at 31
December 2017 and the value of UK investment properties
attributable to the group at year end remained unchanged at £13.25
million (2016: £13.25million).
Joint venture property investments
The group holds a £0.9million (2016: £0.9million) joint venture
investment in Dragon Retail Properties Limited, a UK property
investment company. The open market value of the company’s share of
investment properties included within its joint venture investment
in Dragon Retail Properties remained unchanged at £1.3million
(2016: £1.3million).
Overall, the group achieved net property revenue of £1.21million
(2016: £1.17million) for the year which includes the company’s
share of net property revenue from its investment in joint ventures
of £83,000 (2016: £86,000).
Loans
South
Africa
In July 2017, the group increased
its South African structured trade finance facility with Absa Bank
Limited from R80million (South African Rand) to R100million. The
facility is renewable annually at 30 June and is secured against
inventory, debtors and cash that are held in the group’s South
African operations. This facility comprises of a R80million
revolving facility to cover the fluctuating working capital
requirements of the group’s South African operations, and a fully
drawn R20million loan facility to cover guarantee requirements
related to the group’s South African mining operations. The Board
anticipate the facility will be renewed again this year.
United
Kingdom
In December 2014, the group signed
a £6 million term loan facility with Santander. The Loan is secured
against the group’s UK retail property portfolio. The facility has
a five year term, and is repayable at the end of the term. The
interest cost of the loan is 2.35% above LIBOR. No covenants were
breached during the year.
Cashflow & financial
position
The following table summarises the main components of the
consolidated cashflow for the year: |
Year ended
31 December
2017
£’000 |
Year ended
31 December
2016
£’000 |
Cash flow generated from operations before
working capital and other items |
5,819 |
1,625 |
Cash flow from operating activities |
7,270 |
2,614 |
Cash flow from investing activities |
(1,936) |
(1,691) |
Cash flow from financing activities |
(429) |
(521) |
Net (decrease) / increase in cash and cash
equivalents |
4,905 |
402 |
Cash and cash equivalents at 1 January |
(890) |
(626) |
Exchange adjustment |
50 |
(666) |
Cash and cash equivalents at 31
December |
4,065 |
(890) |
Cash and cash equivalents at 31 December
comprise: |
|
|
Cash and cash equivalents as presented in the balance sheet |
5,327 |
2,444 |
Bank overdrafts (secured) |
(1,262) |
(3,334) |
|
4,065 |
(890) |
Cash flow generated from operating activities increased compared
to the prior year to £7.3million (2016: £2.6 million) mainly due to
the improved operating performance of our South African mining
operations, as outlined above. Overall the group achieved an
increase in operating profit during the year of £3.8million (2016:
£0.6million). In addition to operating profit, the increase in
cashflow generation from operating activities can also be
attributed to a cashflow increase from trade receivables of
£0.9million (2016: £0.2million), as a result of an decrease in the
trade receivables balances of our South African domestic coal
customers, and a cashflow increase from inventories of £0.9million
(2016: decrease of £0.26million), as a result of improved coal
sales from our South African mining operations in the last quarter
of 2017.
Investing cashflows primarily reflect the net effect of capital
expenditure during the year of £1.8million (2016: £2.9million)
which can mainly be attributable to the new infrastructure
improvements to the washing plant facility at Black Wattle, as
outlined in the Mining Review. As at year end the group’s mining
reserves, plant and equipment had a net asset value of £8.6million
(2016: £8.5million) with capital expenditure being offset by
depreciation of £1.8million (2016: £1.8milion) for the year.
Cash outflows from financing activities included dividends paid
to shareholders of £0.4million (2016: 0.4 million).
Overall, the group managed to achieve an overall increase in
cash and cash equivalents of £4.9million (2016: £0.4million) for
the year. After taking into account an exchange gain of
£0.05million (2016: loss of £0.7million) on the translation of the
group’s year end net balance of cash and cash equivalents that were
held in South African Rands, the group’s net balance of cash and
cash equivalents (including bank overdrafts) at year end was £4.1
million (2016: balance owing of: £0.9million).
The group has considerable financial resources available at
short notice including cash and cash equivalents (excluding bank
overdrafts) of £5.3million (2016: £2.4million), investments
available for sale of £1.1million (2016: £0.8million) and its £2m
loan to Dragon Retail Properties Limited which accrues annual
interest at 6.875 per cent. The above financial resources totalling
£8.4million (2016: £5.2million).
The net assets of the group reported as at year end were
£17.7million (2016: £17.0million). Total assets remained stable at
£36.6million (2016: £36.9million) mainly due to a decrease in
inventory and trade receivables balances at year end, as outlined
above, and the write off of the groups’ joint venture investment in
Ezimbokodweni Mining (Pty) Ltd of £1.8million offsetting the
increase in the groups’ cash and cash equivalents balance from
£2.4million to £5.3million during the year. Liabilities decreased
from £19.9million to £18.8million during the year primarily due to
a decrease in current borrowings from £3.4million in 2016 to
£1.3million in 2017. This decrease can mainly be attributed to a
decrease in borrowings drawn from the groups’ South African
structured trade facility utilised by the groups’ mining
operations. The overall exchange gain recorded through the
translation reserve on translation of the group’s South African net
assets at year end decreased to £0.1million (2016: £1.0million) as
a result of the reduced movement of the South African Rand against
UK sterling year to year.
Further details on the group’s cashflow and financial position
are stated in the Consolidated Cashflow Statement on page 59 and
the Consolidated Balance Sheet on page 56.
FUTURE PROSPECTS
As we continue into 2018, the group’s financial position remains
strong and we expect to achieve significant additional value from
our existing mining operations. The group continues to seek to
expand its operations in South
Africa through the acquisition of additional coal reserves,
in particular in areas surrounding Black Wattle where additional
value can be achieved through the use of our existing
infrastructure. In addition, management is currently investigating
other major investment opportunities in the domestic property
sector in line with the groups’ overall strategy of balancing the
high risk of our mining operations with a dependable cash flow and
capital appreciation from our UK property investment
operations.
Further information on the outlook of the company can be found
in both the Chairman’s Statement on page 2 and the Mining Review on
page 6 which form part of the Strategic Report.
Signed on behalf of the Board of Directors
Garrett Casey
Finance Director
20 April 2018
Governance
Management team
1 Sir Michael Heller
Chairman
Bisichi Mining PLC
2 Andrew Heller
Managing Director
Bisichi Mining PLC
Managing Director
Black Wattle Colliery
3 Christopher Joll
Senior Independent Director
Chairman Audit and Remuneration Committees
4 Garrett Casey
Finance Director
Bisichi Mining PLC
Director Black Wattle Colliery
5 Robert Grobler
Director of Mining
Bisichi Mining PLC
Director Black Wattle Colliery
6 Ethan Dube
Director
Black Wattle Colliery
7 Millicent Zvarayi
Director
Black Wattle Colliery
8 Nico Serfontein
Mine Manager
Black Wattle Colliery
Directors and advisors
* Sir Michael
Heller
MA, FCA (Chairman)
Andrew R Heller
MA, ACA
(Managing Director)
Garrett Casey
CA (SA)
(Finance Director)
Robert
Grobler
Pr Cert Eng
(Director of mining)
O+ Christopher A Joll
MA
(Non-executive)
Christopher Joll was appointed a Director on 1 February 2001. He has held a number of
non-executive directorships of quoted and un-quoted companies
and is currently senior partner of MJ2 Events LLP an event
management business.
O * John A Sibbald
BL
(Non-executive)
John Sibbald has been a Director
since 1988. After qualifying as a Chartered Accountant he spent
over 20 years in stockbroking, specialising in mining and
international investment.
* Member of the nomination committee
+ Senior independent director
O Member of the audit, nomination and remuneration
committees.
Secretary and registered office
Garrett Casey CA (SA)
24 Bruton Place
London W1J
6NE
Black Wattle Colliery Directors
Andrew Heller
(Managing Director)
Ethan Dube
Robert Grobler
Millicent Zvarayi
Garrett Casey
Property portfolio asset manager
James Charlton BSc MRICS
Company Registration
Company registration No. 112155 (Incorporated in England and Wales)
Website
www.bisichi.co.uk
E-mail
admin@bisichi.co.uk
Auditor
BDO LLP
Principal bankers
United Kingdom
Santander UK PLC
National Westminster Bank PLC
Investec
PLC
South Africa
ABSA Bank (SA)
First National Bank (SA)
Standard Bank
(SA)
Corporate solicitors
United Kingdom
Fladgate LLP, London
Memery Crystal, London
Olswang LLP, London
South Africa
Brandmullers Attorneys, Middelburg
Herbert Smith Freehills, Johannesburg
Hogan Lovells, Johannesburg
Tugendhaft Wapnick Banchetti and Partners, Johannesburg
Stockbrokers
Shore Capital & Corporate Ltd
Registrars and transfer office
Link Asset Services
65 Gresham Street
London
EC2V 7NQ
Telephone 0871 664 0300
(Calls cost 12p per minute + network extras) or
+44 (0) 371 664 0300 for overseas callers
www.linkassetservices.com
Email: shareholderenquiries@linkgroup.co.uk
Five year summary
|
2017
£’000 |
2016
£’000 |
2014
£’000 |
2013
£’000 |
2012
£’000 |
Consolidated income statement items |
|
|
|
|
|
Revenue |
37,459 |
22,815 |
25,655 |
26,500 |
35,105 |
Operating profit/(loss) |
3,763 |
637 |
150 |
1,364 |
123 |
Profit/(loss) before tax |
1,485 |
346 |
(147) |
1,568 |
102 |
Trading profit/(loss) before tax |
3,317 |
(74) |
(188) |
1,157 |
17 |
Revaluation and impairment profit/(loss) before
tax |
(1,832) |
420 |
41 |
411 |
85 |
EBITDA |
3,734 |
2,415 |
1,365 |
4,609 |
3,039 |
Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted EBITDA) |
5,819 |
1,516 |
1,717 |
4,276 |
3,834 |
|
|
|
|
|
|
Consolidated balance sheet items |
|
|
|
|
|
Investment properties |
13,245 |
13,245 |
12,800 |
11,575 |
11,559 |
Fixed asset investments |
925 |
2,703 |
2,112 |
4,090 |
4,370 |
|
14,170 |
15,948 |
14,912 |
15,665 |
15,929 |
Available for sale investments |
1,050 |
781 |
594 |
796 |
822 |
|
15,220 |
16,729 |
15,506 |
16,461 |
16,751 |
Other assets less liabilities less non-controlling
interests |
1,922 |
(72) |
(196) |
854 |
(123) |
Total equity attributable to equity
shareholders |
17,142 |
16,657 |
15,310 |
17,315 |
16,628 |
Net assets per ordinary share
(attributable) |
160.6p |
156.0p |
143.4p |
162.2p |
156.3p |
Dividend per share |
5.00p |
4.00p |
4.00p |
4.00p |
4.00p |
Financial calendar
6 June 2018 |
Annual General Meeting |
27 July 2018 |
Payment of final and special dividend for 2017
(if approved) |
Late August 2018 |
Announcement of half-year results
to 30 June 2018 |
Late April 2019 |
Announcement of results for year ending
31 December 2018 |
Directors’ report
The directors submit their report together with the audited
financial statements for the year ended 31 December 2017.
Review of business, future
developments and post balance sheet events
The group continues its mining activities. Income for the year
was derived from sales of coal from its South African operations.
The group also has a property investment portfolio for which it
receives rental income.
The results for the year and state of affairs of the group and
the company at 31 December 2017 are
shown on pages 54 to 94 and in the Strategic Report on pages 2 to
23. Future developments and prospects are also covered in the
Strategic Report and further details of any post balance sheet
events can be found in note 31 to the financial statements. Over 99
per cent. of staff are employed in the South African coal mining
industry – employment matters and health and safety are dealt with
in the Strategic Report.
The management report referred to in the Director’s
responsibilities statement encompasses this Directors’ Report and
Strategic Report on pages 2 to 23.
Corporate responsibility
Environment
The environmental considerations of the group’s South African
coal mining operations are covered in the Strategic Report on pages
2 to 23.
The group’s UK activities are principally property investment
whereby premises are provided for rent to retail businesses. The
group seeks to provide those tenants with good quality premises
from which they can operate in an efficient and environmentally
friendly manner. Wherever possible, improvements, repairs and
replacements are made in an environmentally efficient manner and
waste re-cycling arrangements are in place at all the company’s
locations.
Greenhouse Gas Emissions
Details of the group’s greenhouse gas emissions for the year
ended 31 December 2017 can be found
on page 12 of the Strategic Report.
Employment
The group’s policy is to attract staff and motivate employees by
offering competitive terms of employment. The group provides equal
opportunities to all employees and prospective employees including
those who are disabled. The Strategic Report gives details of the
group’s activities and policies concerning the employment,
training, health and safety and community support and social
development concerning the group’s employees in South Africa.
Dividend policy
An interim dividend for 2017 of 1p was paid on 9 February 2018 (Interim 2016: 1p). The directors
recommend the payment of a final dividend for 2017 of 3p per
ordinary share (2016: 3p) as well as a special dividend of 1p
(2016: Nil) making a total dividend for 2017 of 5p (2016: 4p).
Subject to shareholder approval, the total dividend per ordinary
share for 2017 will be 5p per ordinary share.
The final dividend and the special dividend will be payable on
Friday 27 July 2018 to shareholders
registered at the close of business on 6
July 2018.
Investment properties
The investment property portfolio is stated at its open market
value of £13,245,000 at 31 December
2017 (2016: £13,245,000) as valued by professional external
valuers. The open market value of the company’s share of investment
properties included within its investments in joint ventures is
£1,315,000 (2016: £1,315,000).
Financial instruments
Note 21 to the financial statements sets out the risks in
respect of financial instruments. The Board reviews and agrees
overall treasury policies, delegating appropriate authority to the
managing director. Financial instruments are used to manage the
financial risks facing the group. Treasury operations are reported
at each Board meeting and are subject to weekly internal
reporting.
Directors
The directors of the company for the whole year were Sir
Michael Heller, A R Heller, G J
Casey, C A Joll, R J Grobler (a South African citizen), and J A
Sibbald.
The directors retiring by rotation are Mr A R Heller and Mr R J
Grobler who offers themselves for re-election.
Mr A R Heller has been an executive director of the company
since 1998. He is a Chartered Accountant and has been employed by
the group since 1994 under a contract of employment determinable at
three months’ notice. The board recommends the re-election of AR
Heller.
Mr R J Grobler was appointed as General Mine Manager by Black
Wattle Colliery (Proprietary) Ltd on 1 May
2000. He was appointed to the Board of Bisichi Mining PLC as
Director of Mining on 22 August 2008.
He has over 40 years’ experience in the South African coal mining
industry. The board recommends the re-election of RJ Grobler.
No director had any material interest in any contract or
arrangement with the company during the year other than as shown in
this report.
Directors’ shareholdings
The interests of the directors in the shares of the company,
including family and trustee holdings where appropriate, are shown
on
page 38 of the Annual Remuneration Report.
Substantial
interests
The following have advised that they have an interest in 3 per
cent. or more of the issued share capital of the company as at
16 April 2018:
London & Associated
Properties PLC – 4,432,618 shares representing 41.52 per cent. of
the issued capital. (Sir Michael
Heller is a director and shareholder of London & Associated Properties PLC).
Sir Michael Heller – |
330,117 shares representing 3.09 per cent. of the
issued capital. |
A R Heller – |
785,012 shares representing 7.35 per cent. of the
issued capital. |
Cavendish Asset Management
Limited – |
1,892,654 shares representing 17.73 per cent. of
the issued share capital. |
James Hyslop – |
351,126 shares representing 3.29 per cent. of the
issued share capital. |
Disclosure of information to
auditor
The directors in office at the date of approval of the financial
statements have confirmed that as far as they are aware that there
is no relevant audit information of which the auditor is unaware.
Each of the directors has confirmed that they have taken all
reasonable steps they ought to have taken as directors to make
themselves aware of any relevant audit information and to establish
that it has been communicated to the auditor.
INDEMNITIES AND INSURANCE
The Articles of Association and Constitution of the company
provide for them to indemnify, to the extent permitted by law,
directors and officers (excluding the Auditor) of the companies,
including officers of subsidiaries, and associated companies
against liabilities arising from the conduct of the Group’s
business. The indemnities are qualifying third-party indemnity
provisions for the purposes of the UK Companies Act 2006 and each
of these qualifying third-party indemnities was in force during the
course of the financial year ended 31
December 2017 and as at the date of this Directors’ report.
No amount has been paid under any of these indemnities during the
year.
The Group has purchased directors’ and officers’ insurance
during the year. In broad terms, the insurance cover indemnifies
individual directors and officers against certain personal legal
liability and legal defence costs for claims arising out of actions
taken in connection with Group business.
CORPORATE GOVERNANCE
The Board acknowledges the importance of the guidelines set out
in the Quoted Companies Alliance (QCA) published Corporate
Governance Code and complies with these so far as is appropriate
having regard to the size and nature of the company. The paragraphs
below set out how the company has applied this guidance during the
year.
Principles of corporate governance
The group’s Board appreciates the value of good corporate
governance not only in the areas of accountability and risk
management, but also as a positive contribution to business
prosperity. The Board endeavours to apply corporate governance
principles in a sensible and pragmatic fashion having regard to the
circumstances of the group’s business. The key objective is to
enhance and protect shareholder value.
Board structure
During the year the Board comprised the executive chairman, the
managing director, two other executive directors and two
non-executive directors. Their details appear on page 27.
The Board is responsible to shareholders for the proper
management of the group. The Directors’ responsibilities statement
in respect of the accounts is set out on page 46. The non-executive
directors have a particular responsibility to ensure that the
strategies proposed by the executive directors are fully
considered. To enable the Board to discharge its duties, all
directors have full and timely access to all relevant information
and there is a procedure for all directors, in furtherance of
their duties, to take independent professional advice, if
necessary, at the expense of the group. The Board has a formal
schedule of matters reserved to it and meets bi-monthly.
The Board is responsible for overall group strategy, approval of
major capital expenditure projects and consideration of significant
financing matters.
The following Board committees, which have written terms of
reference, deal with specific aspects of the group’s affairs:
- The nomination committee is chaired by Christopher Joll and
comprises the non-executive directors and the executive chairman.
The committee is responsible for proposing candidates for
appointment to the Board, having regard to the balance and
structure of the Board. In appropriate cases recruitment
consultants are used to assist the process. Each director is
subject to re-election at least every three years.
- The remuneration committee is responsible for making
recommendations to the Board on the company’s framework of
executive remuneration and its cost. The committee determines the
contractual terms, remuneration and other benefits for each of the
executive directors, including performance related bonus schemes,
pension rights and compensation payments. The Board itself
determines the remuneration of the non-executive directors. The
committee comprises the non-executive directors. It is chaired by
Christopher Joll. The company’s executive chairman is normally
invited to attend meetings. The report on directors’ remuneration
is set out on pages 35 to 42.
- The audit committee comprises the two non-executive directors
and is chaired by Christopher Joll. Its prime tasks are to review
the scope of external audit, to receive regular reports from the
company’s auditor and to review the half-yearly and annual accounts
before they are presented to the Board, focusing in particular on
accounting policies and areas of management judgment and
estimation. The committee is responsible for monitoring the
controls which are in force to ensure the integrity of the
information reported to the shareholders. The committee acts as a
forum for discussion of internal control issues and contributes to
the Board’s review of the effectiveness of the group’s internal
control and risk management systems and processes. The committee
also considers annually the need for an internal audit function. It
advises the Board on the appointment of external auditors and on
their remuneration for both audit and non-audit work, and discusses
the nature and scope of the audit with the external auditors. The
committee, which meets formally at least twice a year, provides a
forum for reporting by the group’s external auditors.
Meetings are also attended, by invitation, by the company
chairman, managing director and finance director.
The audit committee also undertakes a formal assessment of the
auditors’ independence each year which includes:
- a review of non-audit services provided to the group and
related fees;
- discussion with the auditors of a written report detailing
consideration of any matters that could affect independence or the
perception of independence;
- a review of the auditors’ own procedures for ensuring the
independence of the audit firm and partners and staff involved in
the audit, including the regular rotation of the audit partner;
and
- obtaining written confirmation from the auditors that, in their
professional judgement, they are independent.
The audit committee report is set out on page 43.
An analysis of the fees payable to the external audit firm in
respect of both audit and non-audit services during the year is set
out in Note 4 to the financial statements.
Performance evaluation – board,
board committees and directors
The performance of the board as a whole and of its committees
and the non-executive directors is assessed by the chairman and the
managing director and is discussed with the senior independent
director. Their recommendations are discussed at the nomination
committee prior to proposals for re-election being recommended to
the Board. The performance of executive directors is discussed and
assessed by the remuneration committee. The senior independent
director meets regularly with the chairman and both the executive
and non-executive directors individually outside of formal
meetings. The directors will take outside advice in reviewing
performance but have not found this necessary to date.
Independent directors
The senior independent non-executive director is Christopher
Joll. The other independent non-executive director is
John Sibbald.
Christopher Joll has been a non-executive director for over
fifteen years and John Sibbald has
been a non-executive director for over twenty five years. The Board
encourages Christopher Joll and John
Sibbald to act independently. The board considers that their
length of service and connection with the company’s public
relations advisers, does not, and has not, resulted in their
inability or failure to act independently. In the opinion of the
Board, Christopher Joll and John Sibbald continue to fulfil
their role as independent non-executive directors.
The independent directors regularly meet prior to Board
meetings to discuss corporate governance issues.
Board and board committee meetings
The number of meetings during 2017 and attendance at regular
Board meetings and Board committees was as follows:
|
|
Meetings
held |
Meetings Attended |
Sir Michael Heller |
Board
Nomination committee |
5
1 |
5
1 |
A R Heller |
Board
Audit committee |
5
2 |
5
2 |
G J Casey |
Board
Audit committee |
5
2 |
5
2 |
R J Grobler |
Board |
5 |
1 |
C A Joll |
Board
Audit committee
Nomination committee
Remuneration committee |
5
2
1
1 |
5
2
1
1 |
J A Sibbald |
Board
Audit committee
Nomination committee
Remuneration committee |
5
2
1
1 |
5
2
1
1 |
Internal control
The directors are responsible for the group’s system of internal
control and review of its effectiveness annually. The Board has
designed the group’s system of internal control in order to provide
the directors with reasonable assurance that its assets are
safeguarded, that transactions are authorised and properly recorded
and that material errors and irregularities are either prevented or
would be detected within a timely period. However, no system of
internal control can eliminate the risk of failure to achieve
business objectives or provide absolute assurance against material
misstatement or loss.
The key elements of the control system in operation are:
- the Board meets regularly with a formal schedule of matters
reserved to it for decision and has put in place an organisational
structure with clearly defined lines of responsibility and with
appropriate delegation of authority;
- there are established procedures for planning, approval and
monitoring of capital expenditure and information systems for
monitoring the group’s financial performance against approved
budgets and forecasts;
- UK property and financial operations are closely monitored by
members of the Board and senior managers to enable them to assess
risk and address the adequacy of measures in place for its
monitoring and control. The South African operations are closely
supervised by the UK based executives through daily, weekly and
monthly reports from the directors and senior officers in
South Africa. This is supplemented
by monthly visits by the UK based finance director to the South
African operations which include checking the integrity of
information supplied to the UK. The directors are guided by the
internal control guidance for directors issued by the Institute of
Chartered Accountants in England
and Wales.
During the period, the audit committee has reviewed the
effectiveness of internal control as described above. The Board
receives periodic reports from its committees.
There are no significant issues disclosed in the Annual Report
for the year ended 31 December 2017
(and up to the date of approval of the report) concerning material
internal control issues. The directors confirm that the Board has
reviewed the effectiveness of the system of internal control as
described during the period.
Communication with shareholders
Communication with shareholders is a matter of priority.
Extensive information about the group and its activities is given
in the Annual Report, which is made available to shareholders.
Further information is available on the company’s website,
www.bisichi.co.uk. There is a regular dialogue with institutional
investors. Enquiries from individuals on matters relating to their
shareholdings and the business of the group are dealt with
informatively and promptly.
Takeover directive
The company has one class of share capital, ordinary shares.
Each ordinary share carries one vote. All the ordinary shares rank
pari passu. There are no securities issued in the company which
carry special rights with regard to control of the company. The
identity of all substantial direct or indirect holders of
securities in the company and the size and nature of their holdings
is shown under the “Substantial interests” section of this report
above.
A relationship agreement dated 15
September 2005 (the “Relationship Agreement”) was entered
into between the company and London & Associated Properties PLC (“LAP”)
in regard to the arrangements between them whilst LAP is a
controlling shareholder of the company. The Relationship Agreement
includes a provision under which LAP has agreed to exercise the
voting rights attached to the ordinary shares in the company
owned by LAP to ensure the independence of the Board of directors
of the company.
Other than the restrictions contained in the Relationship
Agreement, there are no restrictions on voting rights or on the
transfer of ordinary shares in the company. The rules governing the
appointment and replacement of directors, alteration of the
articles of association of the company and the powers of the
company’s directors accord with usual English company law
provisions. Each director is re-elected at least every three years.
The company is not party to any significant agreements that take
effect, alter or terminate upon a change of control of the company
following a takeover bid. The company is not aware of any
agreements between holders of its ordinary shares that may result
in restrictions on the transfer of its ordinary shares or on voting
rights.
There are no agreements between the company and its directors or
employees providing for compensation for loss of office or
employment that occurs because of a takeover bid.
The Bribery Act 2010
The Bribery Act 2010 came into force on 1
July 2011, and the Board took the opportunity to implement a
new Anti-Bribery Policy. The company is committed to acting
ethically, fairly and with integrity in all its endeavours and
compliance of the code is closely monitored.
Annual General Meeting
The annual general meeting of the company (“Annual General
Meeting”) will be held at 24 Bruton Place, London W1J 6NE on Wednesday, 6 June 2018 at 11.00
a.m. Resolutions 1 to 9 will be proposed as ordinary
resolutions. More than 50 per cent. of shareholders’ votes cast
must be in favour for those resolutions to be passed. Resolutions
10 to 12 will be proposed as special resolutions. At least 75 per
cent. of shareholders’ votes cast must be in favour for those
resolutions to be passed.
The directors consider that all of the resolutions to be put to
the meeting are in the best interests of the company and its
shareholders as a whole. The Board recommends that shareholders
vote in favour of all resolutions.
Please note that the following paragraphs are only summaries of
certain resolutions to be proposed at the Annual General Meeting
and not the full text of the resolutions. You should therefore read
this section in conjunction with the full text of the resolutions
contained in the notice of Annual General Meeting.
Directors’ authority to allot shares
(Resolution 9)
In certain circumstances it is important for the company to be
able to allot shares up to a maximum amount without needing to seek
shareholder approval every time an allotment is required. Paragraph
9.1.1 of resolution 9 would give the directors the authority to
allot shares in the company and grant rights to subscribe for, or
convert any security into, shares in the company up to an aggregate
nominal value of £355,894. This represents approximately 1/3 (one
third) of the ordinary share capital of the company in issue
(excluding treasury shares) at 16 April
2018 (being the last practicable date prior to the
publication of this Directors’ Report). Paragraph 9.1.2 of
resolution 9 would give the directors the authority to allot shares
in the company and grant rights to subscribe for, or convert any
security into, shares in the company up to a further aggregate
nominal value of £355,894, in connection with a pre-emptive rights
issue. This amount represents approximately 1/3 (one third) of the
ordinary share capital of the company in issue (excluding treasury
shares) at 16 April 2018 (being the
last practicable date prior to the publication of this Directors’
Report).
Therefore, the maximum nominal value of shares or rights to
subscribe for, or convert any security into, shares which may be
allotted or granted under resolution 9 is £711,788.
Resolution 9 complies with guidance issued by the Investment
Association (IA).
The authority granted by resolution 9 will expire on
31 August 2019 or, if earlier, the
conclusion of the next annual general meeting of the company. The
directors have no present intention to make use of this authority.
However, if they do exercise the authority, the directors intend to
follow emerging best practice as regards its use as recommended by
the IA.
Disapplication of pre-emption rights
(Resolution 10)
A special resolution will be proposed at the Annual General
Meeting in respect of the disapplication of pre-emption rights.
Shares allotted for cash must normally first be offered to
shareholders in proportion to their existing shareholdings. The
directors will, at the forthcoming Annual General Meeting seek
power to allot equity securities (as defined by section 560 of the
Companies Act 2006) or sell treasury shares for cash as if the
pre-emption rights contained in Section 561 of the Companies Act
2006 did not apply:
(a) in relation to pre-emptive offers and offers to
holders of other equity securities if required by the rights of
those securities or as the directors otherwise consider necessary,
up to a maximum nominal amount of £355,894 which represents
approximately 1/3 (one third) of the ordinary share capital of the
company in issue (excluding treasury shares) and, in relation to
rights issues only, up to a maximum additional amount of £355,894
which represents approximately 1/3 (one third) of the ordinary
share capital of the company in issue (excluding treasury shares),
in each case as at 16 April 2018
(being the last practicable date prior to the publication of this
Directors’ Report); and
(b) in any other case, up to a maximum nominal amount of
£53,384 which represents approximately 5 per cent. of the ordinary
share capital of the company in issue (excluding treasury shares)
as at 16 April 2018 (being the last
practicable date prior to the publication of this Directors’
Report).
In compliance with the guidelines issued by the Pre-emption
group, the directors will ensure that, other than in relation to a
rights issue, no more than 7.5 per cent. of the issued ordinary
shares (excluding treasury shares) will be allotted for cash on a
non-pre-emptive basis over a rolling three year period unless
shareholders have been notified and consulted in advance.
The power in resolution 10 will expire when the authority given
by resolution 9 is revoked or expires.
The directors have no present intention to make use of this
authority.
NOTICE OF GENERAL MEETINGS
(RESOLUTION 11)
Resolution 11 will be proposed to allow the company to call
general meetings (other than an Annual General Meeting) on 14 clear
days’ notice. A resolution in the same terms was passed at the
Annual General Meeting in 2017. The notice period required by the
Companies Act 2006 for general meetings of the company is 21 days
unless shareholders approve a shorter notice period, which cannot
however be less than 14 clear days. Annual General Meetings must
always be held on at least 21 clear days’ notice. It is intended
that the flexibility offered by this resolution will only be used
for time-sensitive, non-routine business and where merited in the
interests of shareholders as a whole. The approval will be
effective until the company’s next Annual General Meeting, when it
is intended that a similar resolution will be proposed. In order to
be able to call a general meeting on less than 21 clear days’
notice, the company must make a means of electronic voting
available to all shareholders for that meeting.
Purchase of own Ordinary Shares
(Resolution 12)
The effect of resolution 12 would be to renew the directors’
current authority to make limited market purchases of the company’s
ordinary shares of 10 pence each. The
power is limited to a maximum aggregate number of 1,067,683
ordinary shares (representing approximately 10 per cent. of the
company’s issued share capital as at 16
April 2018 (being the last practicable date prior to
publication of this Directors’ Report)). The minimum price
(exclusive of expenses) which the company would be authorised to
pay for each ordinary share would be 10
pence (the nominal value of each ordinary share). The
maximum price (again exclusive of expenses) which the company would
be authorised to pay for an ordinary share is an amount equal to
105 per cent. of the average market price for an ordinary share for
the five business days preceding any such purchase.
The authority conferred by resolution 12 will expire at the
conclusion of the company’s next annual general meeting or 15
months from the passing of the resolution, whichever is the
earlier. Any purchases of ordinary shares would be made by means of
market purchase through the London Stock Exchange. If granted, the
authority would only be exercised if, in the opinion of the
directors, to do so would result in an increase in earnings per
share or net asset value per share and would be in the best
interests of shareholders generally. In exercising the authority to
purchase ordinary shares, the directors may treat the shares that
have been bought back as either cancelled or held as treasury
shares (shares held by the company itself). No dividends may be
paid on shares which are held as treasury shares and no voting
rights are attached to them.
As at 16 April 2018 (being the
last practicable date prior to the publication of this Directors’
Report) the total number of new ordinary shares over which options
have been granted was 380,000 shares representing 3.56 per cent. of
the company’s issued share capital (excluding treasury shares) as
at that date. Such number of options to subscribe for new ordinary
shares would represent approximately 3.95 per cent. of the reduced
issued share capital of the company (excluding treasury shares)
assuming full use of the authority to make market purchases sought
under resolution 12.
Donations
No political or charitable donations were made during the year
(2016: Nil).
Going concern
The group’s business activities, together with the factors
likely to affect its future development are set out in the
Chairman’s Statement on the preceding page 2, the Mining Review on
pages 6 to 7 and its financial position is set out on page 22 of
the Strategic Report. In addition Note 21 to the financial
statements includes the group’s treasury policy, interest rate
risk, liquidity risk, foreign exchange risks and credit risk.
The group has prepared cash flow forecasts which demonstrate
that the group has sufficient resources to meet its liabilities as
they fall due for at least the next 12 months.
In July 2017, the group increased
its South African structured trade finance facility with Absa Bank
Limited from R80million (South African Rand) to R100million. The
facility is renewable annually at 30 June and is secured against
inventory, debtors and cash that are held in the group’s South
African operations. This facility comprises of a R80million
revolving facility to cover the fluctuating working capital
requirements of the group’s South African operations, and a fully
drawn R20million loan facility to cover guarantee requirements
related to the group’s South African mining operations. The
Directors do not foresee any reason why the facility will not
continue to be renewed at the next renewal date, in line with prior
periods and based on their banking relationships.
The directors expect that the improved coal market conditions
experienced by Black Wattle Colliery, its direct mining asset in
2017 and the first quarter of 2018 will be similar for at least the
next 12 months. The directors therefore have a reasonable
expectation that the mine will continue to achieve positive levels
of cash generation for the group for at least the next 12 months.
As a consequence, the directors believe that the group is well
placed to manage its South African business risks successfully.
In the UK, a £6 million term loan facility repayable in 2019 is
held with Santander Bank PLC. The loan is secured against the
company’s UK retail property portfolio. The debt package has a five
year term and is repayable at the end of the term. The interest
cost of the loan is 2.35% above LIBOR.
If required, the group has sufficient financial resources
available at short notice including cash, available-for-sale
investments and its £2m loan to Dragon Retail Properties Limited
which is repayable on demand. In addition its investment property
assets benefit from long term leases with the majority of its
tenants.
As a result of the banking facilities held as well as the
acceptable levels of profitability and cash generation the group’s
South African operations are expected to achieve for at least the
next 12 months, the Directors believe that the group has adequate
resources to continue in operational existence for the foreseeable
future and that the group is well placed to manage its business
risks. Thus they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
By order of the board
G.J Casey
Secretary
24 Bruton Place
London W1J
6NE
20 April 2018
Statement of the Chairman
of the remuneration committee
The remuneration committee presents
its report for the year ended 31 December 2017.
The remuneration committee presents its report for the year
ended 31 December 2017.
The Annual Remuneration Report details remuneration awarded to
directors and non-executive directors during the year. The
shareholders will be asked to approve the Annual Remuneration
Report as an ordinary resolution (as in previous years) at the AGM
in June 2018.
A copy of the remuneration policy, which details the
remuneration policy for directors, can be found at
www.bisichi.co.uk. The current remuneration policy was subject to a
binding vote which was approved by shareholders at the AGM in
June 2017. The approved policy took
effect from 7 June 2017 and will
apply for a three year period.
The remuneration committee reviewed the existing policy and
deemed no changes necessary to the current arrangements.
Both of the above reports have been prepared in accordance with
The Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013.
The company’s auditors, BDO LLP are required by law to audit
certain disclosures and where disclosures have been audited they
are indicated as such.
Christopher Joll
Chairman – remuneration committee
24 Bruton Place
London W1J 6NE
20 April 2018
Annual remuneration report
The following information has been audited:
Single total figure of remuneration for the year ended
31 December 2017:
|
Salaries
and Fees
£’000 |
Bonuses
£’000 |
Benefits
£’000 |
Pension
£’000 |
Total
before
Share
options
£’000 |
Share
options
£’000 |
Total
2017
£’000 |
Executive Directors |
|
|
|
|
|
|
|
Sir Michael Heller |
75 |
- |
- |
- |
75 |
- |
75 |
A R Heller |
450 |
350 |
66 |
32 |
898 |
- |
898 |
G J Casey |
133 |
125 |
14 |
18 |
290 |
- |
290 |
R Grobler |
188 |
122 |
16 |
11 |
337 |
- |
337 |
Non–Executive Directors |
|
|
|
|
|
|
|
C A Joll* |
30 |
- |
- |
- |
30 |
- |
30 |
J A Sibbald* |
2 |
- |
3 |
- |
5 |
- |
5 |
Total |
878 |
597 |
99 |
61 |
1,635 |
- |
1,635 |
*Members of the remuneration committee for the year ended
31 December 2017
Single total figure of remuneration for the year ended
31 December 2016:
|
Salaries
and Fees
£’000 |
Bonuses
£’000 |
Benefits
£’000 |
Pension
£’000 |
Total
before
Share
options
£’000 |
Share
options
£’000 |
Total
2016
£’000 |
Executive Directors |
|
|
|
|
|
|
|
Sir Michael Heller |
75 |
- |
- |
- |
75 |
- |
75 |
A R Heller |
450 |
300 |
68 |
32 |
850 |
- |
850 |
G J Casey |
133 |
100 |
14 |
18 |
265 |
- |
265 |
R Grobler |
154 |
60 |
14 |
8 |
236 |
- |
236 |
Non–Executive Directors |
|
|
|
|
|
|
|
C A Joll* |
30 |
- |
- |
- |
30 |
- |
30 |
J A Sibbald* |
2 |
- |
3 |
- |
5 |
- |
5 |
Total |
844 |
460 |
99 |
58 |
1,461 |
- |
1,461 |
*Members of the remuneration committee for the year ended
31 December 2016
Summary of directors’ terms |
Date of contract |
Unexpired term |
Notice period |
Executive directors |
|
|
|
Sir Michael Heller |
November 1972 |
Continuous |
6 months |
A R Heller |
January 1994 |
Continuous |
3 months |
G J Casey |
June 2010 |
Continuous |
3 months |
R J Grobler |
April 2008 |
Continuous |
3 months |
Non-executive directors |
|
|
|
C A Joll |
February 2001 |
Continuous |
3 months |
J A Sibbald |
October 1988 |
Continuous |
3 months |
Pension schemes and
incentives
Three (2016: Three) directors have benefits under money purchase
pension schemes. Contributions in 2017 were £61,000 (2016:
£58,000), see table above.
Scheme interests awarded during the
year
No scheme interests were awarded in the year ended 31 December 2017. Subsequent to year end the
company granted options over ordinary shares in the Company of
10 pence (the “Options”) to the
following directors of the Company, under the Company’s Unapproved
Executive Share Option Scheme 2012 (“the Scheme”), as set out
below:
- Andrew Heller: 150,000 options
granted on 6 February 2018 at an
exercise price of £0.7350 per share
- Garrett Casey: 230,000 options
granted on 6 February 2018 at an
exercise price of £0.7350 per share
The above Options are subject to the terms and conditions set
out in the rules of the Scheme, and subject to the memorandum and
articles of association of the Company. These Options are
exercisable at any time during the next 10 years from the dates of
grant stated above. No consideration has been paid for the granting
of these Options.
Share option schemes
The company currently has one “Unapproved” Share Option Schemes
which is not subject to HM Revenue and Customs (HMRC) approval. The
“2010 Scheme” was approved by shareholders on 7 June 2011. The “2012 Scheme” was approved by
the remuneration committee of the company on 28 September 2012.
|
Number of share
options |
|
|
|
|
|
Option
price* |
1 January
2017 |
Options
lapsed
in
2017 |
31
December
2017 |
Exercisable
from |
Exercisable
to |
The 2010 Scheme |
|
|
|
|
|
|
G J Casey |
202.05p |
80,000 |
- |
80,000 |
31/08/2013 |
30/08/2020 |
The 2012 Scheme |
|
|
|
|
|
|
A R Heller |
87.01p |
150,000 |
- |
150,000 |
18/09/2015 |
17/09/2025 |
G J Casey |
87.01p |
150,000 |
- |
150,000 |
18/09/2015 |
17/09/2025 |
*Middle market price at date of grant
No consideration is payable for the grant of options under the
2012 Unapproved Share Option Scheme. There are no performance
conditions attached to the 2012 Unapproved Share Option scheme.
On the 5 February 2018 the company
entered into an agreement with Garrett
Casey to surrender the 80,000 Options which were granted on
31 August 2010 under the 2010 Scheme.
The aggregate consideration paid by the Company to effect the
cancellation was £1.
Payments to past directors
No payments were made to past directors in the year ended
31 December 2017.
Payments for loss of office
No payments for loss of office were made in the year ended
31 December 2017.
STATEMENT OF DIRECTORS’ SHAREHOLDING
AND SHARE INTEREST
Directors’ interests
The interests of the directors in the shares of the company,
including family and trustee holdings where appropriate, were as
follows:
|
Beneficial |
Non-beneficial |
|
31.12.2017 |
1.1.2017 |
31.12.2017 |
1.1.2017 |
Sir Michael
Heller |
148,783 |
148,783 |
181,334 |
181,334 |
A R Heller |
785,012 |
785,012 |
- |
- |
C A Joll |
- |
- |
- |
- |
J A Sibbald |
- |
- |
- |
- |
R J Grobler |
- |
- |
- |
- |
G J Casey |
40,000 |
40,000 |
- |
- |
The following section is
unaudited.
The following graph illustrates the company’s performance
compared with a broad equity market index over a ten year period.
Performance is measured by total shareholder return. The directors
have chosen the FTSE All Share Mining index as a suitable index for
this comparison as it gives an indication of performance against a
spread of quoted companies in the same sector.
The middle market price of Bisichi Mining PLC ordinary shares at
31 December 2017 was 70.5p
(2016-74p). During the year the share price ranged between 68.25p
and 82.50p.
Remuneration of the Managing Director over the last ten
years
The table below demonstrates the remuneration of the holder of
the office of Managing Director for the last ten years for the
period from 1 January 2008 to 31
December 2017.
Year |
Managing
Director |
Managing Director
Single total figure of
remuneration
£’000 |
Annual bonus payout
against maximum
opportunity*
% |
Long-term incentive
vesting rates against
maximum opportunity*
% |
2017 |
A R Heller |
898 |
25% |
N/A |
2016 |
A R Heller |
850 |
22% |
N/A |
2015 |
A R Heller |
912 |
22% |
N/A |
2014 |
A R Heller |
862 |
22% |
N/A |
2013 |
A R Heller |
614 |
N/A |
N/A |
2012 |
A R Heller |
721 |
N/A |
N/A |
2011 |
A R Heller |
626 |
N/A |
N/A |
2010 |
A R Heller |
568 |
N/A |
N/A |
2009 |
A R Heller |
817 |
N/A |
N/A |
2008 |
A R Heller |
961 |
N/A |
N/A |
Bisichi Mining PLC does not have a Chief Executive so the table
includes the equivalent information for the Managing Director.
*There were no formal criteria or conditions to apply in
determining the amount of bonus payable or the number of shares to
be issued prior to 2014.
Percentage change in remuneration of
director undertaking role of Managing Director
|
Managing
Director
£’000 |
UK based
employees
£’000 |
|
2017 |
2016 |
% change |
2017 |
2016 |
% change |
|
Base salary |
450 |
450 |
0% |
208 |
208 |
0% |
|
Benefits |
66 |
68 |
(3.03%) |
14 |
14 |
0% |
|
Bonuses |
350 |
300 |
16.67% |
125 |
100 |
25% |
|
|
|
|
|
|
|
|
|
|
Bisichi Mining PLC does not have a Chief Executive so the table
includes the equivalent information for the Managing Director.
The comparator group chosen is all UK based employees as the
remuneration committee believe this provides the most accurate
comparison of underlying increases based on similar annual bonus
performances utilised by the group.
Relative importance of spend on
pay
The total expenditure of the group on remuneration to all
employees (see Notes 28 and 8 to the financial statements) is shown
below:
|
2017
£’000 |
2016
£’000 |
Employee remuneration |
6,396 |
5,321 |
Distribution to shareholders |
534 |
427 |
Statement of implementation of new
remuneration policy
The remuneration policy was approved at the AGM in June 2017. The policy took effect from
7 June 2017 and will apply for 3
years unless changes are deemed necessary by the Remuneration
committee. The company may not make a remuneration payment or
payment for loss of office to a person who is, is to be, or has
been a director of the company unless that payment is consistent
with the approved remuneration policy, or has otherwise been
approved by a resolution of members.
Consideration by the directors of
matters relating to directors’ remuneration
The remuneration committee considered the executive directors
remuneration and the board considered the non-executive directors
remuneration in the year ended 31 December
2017. No increases were awarded and no external advice was
taken in reaching this decision.
SHAREHOLDER VOTING
At the Annual General Meeting on 7 June
2017, there was an advisory vote on the resolution to
approve the remuneration report, other than the part containing the
remuneration policy. In addition, on 7 June
2017 there was a binding vote on the resolution to approve
the current remuneration policy the results of which are detailed
below:
|
% of votes
for |
% of votes
against |
No of votes
withheld |
Resolution to approve the
Remuneration Report (7 June 2017) |
74.75% |
25.18% |
- |
Resolution to approve the
Remuneration Policy (7 June 2017) |
74.77% |
25.16% |
- |
Service contracts
All executive directors have full-time contracts of employment
with the company. Non-executive directors have contracts of
service. No director has a contract of employment or contract of
service with the company, its joint venture or associated companies
with a fixed term which exceeds twelve months. Directors notice
periods (see page 37 of the annual remuneration report) are set in
line with market practice and of a length considered sufficient to
ensure an effective handover of duties should a director leave the
company.
All directors’ contracts as amended from time to time, have run
from the date of appointment. Service contracts are kept at the
registered office.
Remuneration policy table
The remuneration policy table below is an extract of the group’s
current remuneration policy on directors’ remuneration, which was
approved by a binding vote at the 2017 AGM. The approved
policy took effect from 7 June 2017. A copy of the full policy
can be found at www.bisichi.co.uk.
Element |
Purpose |
Policy |
Operation |
Opportunity and performance conditions |
Executive directors |
Base salary |
To recognise:
Skills
Responsibility
Accountability
Experience
Value |
Considered by remuneration committee
on appointment.
Set at a level considered appropriate to attract, retain motivate
and reward the right individuals. |
Reviewed annually
Paid monthly in cash |
No individual director will be
awarded a base salary in excess of £700,000 per annum.
No specific performance conditions are attached to base
salaries. |
Pension |
To provide competitive retirement benefits |
Company contribution offered at up to 10% of base
salary as part of overall remuneration package |
The contribution payable by the
company is included in the
director’s contract of employment.
Paid into money purchase schemes |
Company contribution offered at up to
10% of base salary as part of overall remuneration package.
No specific performance conditions are attached to pension
contributions |
Benefits |
To provide a competitive benefits
package |
Contractual benefits can include but
are not limited to:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance |
The committee retains the discretion
to approve changes in contractual benefits in exceptional
circumstances or where factors outside the control of the Group
lead to increased
costs (e.g. medical inflation) |
The costs associated with benefits
offered are closely controlled and reviewed on an annual basis.
No director will receive benefits of a value in excess of 30% of
his base salary.
No specific performance conditions are attached to contractual
benefits.
The value of benefits for each director for the year ended 31
December 2017 is shown in the table on page 36. |
Annual Bonus |
To reward and incentivise |
In assessing the
performance of the executive team, and in particular to determine
whether bonuses are merited the remuneration committee takes into
account the overall performance of the business.
Bonuses are generally offered in cash |
The remuneration committee
determines the level of bonus on an annual basis applying such
performance conditions and performance measures as
it considers appropriate |
The current maximum
bonus opportunity will not exceed 200% of base salary in any one
year, but the remuneration committee reserves the power to award up
to 300% in an exceptional year.
Performance conditions will be assessed on an annual basis. The
performance measures applied may be financial, non-financial,
corporate, divisional or individual and in such proportion as the
remuneration committee considers appropriate |
Share Options |
To provide executive directors with a long-term
interest in the company |
Granted under existing schemes (see page 37) |
Offered at appropriate times by the remuneration
committee |
Entitlement to share options is not
subject to any specific performance conditions.
Share options will be offered by the remuneration committee as
appropriate.
The aggregate number of shares over which options may be granted
under all of the company’s option schemes (including any options
and awards granted under the company’s employee share plans) in any
period of ten years, will not exceed, at the time of grant, 10% of
the ordinary share capital of the company from time to time. In
determining the limits no account shall be taken of any shares
where the right to acquire the shares has been released, lapsed or
has otherwise become incapable of exercise.
The company currently has two Share Option Schemes (see page 37).
The performance conditions for the 2010 scheme requires growth in
net assets over a three year period to exceed the growth in the
retail price index by a scale of percentages. For the 2012 scheme
the remuneration committee has the ability to impose performance
criteria in respect of any new share options granted, however there
is no requirement to do so. There are no performance conditions
attached to the options already issued under the 2012 scheme. |
Non-executive directors |
Base salary |
To recognise:
Skills
Experience
Value |
Considered by the board on
appointment.
Set at a level considered appropriate to attract, retain and
motivate the individual.
Experience and time required for the role are considered on
appointment. |
Reviewed annually |
No individual director will be
awarded a base salary in excess of £40,000 per annum.
No specific performance conditions are attached to base
salaries. |
Pension |
|
No pension offered |
|
|
Benefits |
|
No benefits offered except
to one non-executive director who is eligible for health
cover (see annual remuneration report
page 36) |
The committee retains the discretion to approve
changes in contractual benefits in exceptional circumstances or
where factors outside the control of the Group lead to increased
costs (e.g. medical inflation) |
The costs associated with the benefit
offered is closely controlled and reviewed on an annual basis.
No director will receive benefits of a value in excess of 30% of
his base salary.
No specific performance conditions are attached to contractual
benefits. |
Share Options |
|
Non-executive directors do not participate in the
share option schemes |
|
|
In order to ensure that shareholders have sufficient clarity
over director remuneration levels, the company has, where possible,
specified a maximum that may be paid to a director in respect of
each component of remuneration. The remuneration committee consider
the performance measures outlined in the table above to be
appropriate measures of performance and that the KPI’s chosen align
the interests of the directors and shareholders.
For details of remuneration of other company employees can be
found in Note 28 to the financial statements.
Audit committee report
The committee’s terms of reference
have been approved by the board and follow published guidelines,
which are available from the company secretary. The audit committee
comprises the two non-executive directors, Christopher Joll
(chairman), an experienced financial PR executive and John Sibbald, a retired chartered
accountant.
The Audit Committee’s prime tasks are to:
• review the scope of external audit, to receive regular reports
from the auditor and to review the half-yearly and annual accounts
before they are presented to the board, focusing in particular on
accounting policies and areas of management judgment and
estimation;
• monitor the controls which are in force to ensure the
integrity of the information reported to the shareholders;
• assess key risks and to act as a forum for discussion of risk
issues and contribute to the board’s review of the effectiveness of
the group’s risk management control and processes;
• act as a forum for discussion of internal control issues and
contribute to the board’s review of the effectiveness of the
group’s internal control and risk management systems and
processes;
• consider each year the need for an internal audit
function;
• advise the board on the appointment of external auditors and
rotation of the audit partner every five years, and on their
remuneration for both audit and non-audit work, and discuss the
nature and scope of their audit work;
• participate in the selection of a new external audit partner
and agree the appointment when required;
• undertake a formal assessment of the auditors’ independence
each year which includes:
~ a
review of non-audit services provided to the group and related
fees;
~
discussion with the auditors of a written report detailing all
relationships with the company and any other parties that could
affect independence or the perception of independence;
~ a
review of the auditors’ own procedures for ensuring the
independence of the audit firm and partners and staff involved in
the audit, including the regular rotation of the audit partner;
and
~
obtaining written confirmation from the auditors that, in their
professional judgement, they are independent.
Meetings
The committee meets prior to the annual audit with the external
auditors to discuss the audit plan and again prior to the
publication of the annual results. These meetings are attended by
the external audit partner, managing director, director of finance
and company secretary. Prior to bi-monthly board meetings the
members of the committee meet on an informal basis to discuss any
relevant matters which may have arisen. Additional formal meetings
are held as necessary.
During the past year the committee:
• met with the external auditors, and discussed their reports to
the Audit Committee;
• approved the publication of annual and half-year financial
results;
• considered and approved the annual review of internal
controls;
• decided that due to the size and nature of operation there was
not a current need for an internal audit function;
• agreed the independence of the auditors and approved their
fees for both audit related and non-audit services as set out in
note 4 to the financial statements.
FINANCIAL REPORTING
As part of its role, the Audit Committee assessed the audit
findings that were considered most significant to the financial
statements, including those areas requiring significant judgment
and/or estimation. When assessing the identified financial
reporting matters, the committee assessed quantitative materiality
primarily by reference to the carrying value of the group’s total
assets, given that the group operates a principally asset based
business. The Board also gave consideration to the value of
revenues generated by the group, given the importance of
production, and its Adjusted EBITDA, given that it is a key trading
KPI, when determining quantitative materiality. The qualitative
aspects of any financial reporting matters identified during the
audit process were also considered when assessing their
materiality. Based on the considerations set out above we have
considered quantitative errors individually or in aggregate in
excess of approximately £300,000 to £350,000 to be material.
External
Auditors
BDO LLP held office throughout the year. In the United Kingdom the company is provided with
extensive administration and accounting services by London & Associated Properties PLC which
has its own audit committee and employs a separate firm of external
auditors, RSM UK Audit LLP (Formerly Baker Tilly UK Audit LLP). In
South Africa Grant Thornton (Jhb)
Inc. acts as the external auditor to the South African companies,
and the work of that firm was reviewed by BDO LLP for the purpose
of the group audit.
Christopher Joll
Chairman – audit committee
24 Bruton Place
London W1J 6NE
20 April 2018
Valuers’ certificates
To the directors of Bisichi Mining
PLC
In accordance with your instructions we have carried out a
valuation of the freehold property interests held as at
31 December 2017 by the company as
detailed in our Valuation Report dated 20
February 2018.
Having regard to the foregoing, we are of the opinion that the
open market value as at 31 December
2017 of the interests owned by the company was £13,245,000
being made up as follows:
|
£’000 |
Freehold |
10,550 |
Leasehold |
2,695 |
|
13,245 |
Leeds
20 February 2018 |
Carter
Towler
Regulated by Royal Institute of Chartered Surveyors |
Directors’ responsibilities
statement
The directors are responsible for
preparing the annual report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
are required to prepare the group financial statements in
accordance with International Financial Reporting Standards as
adopted by the European Union and have elected to prepare the
company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law). Under company law the directors must
not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the group
and company and of the profit or loss for the group for that
period.
In preparing these financial statements, the directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• state with regard to the group financial statements whether
they have been prepared in accordance with IFRSs as adopted by the
European Union subject to any material departures disclosed and
explained in the financial statements;
• state with regard to the parent company financial statements,
whether applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company and the
group will continue in business; and
• prepare a director’s report, a strategic report and director’s
remuneration report which comply with the requirements of the
Companies Act 2006.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with the Companies Act 2006 and, as
regards the group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities. The
Directors are responsible for ensuring that the annual report and
accounts, taken as a whole, are fair, balanced, and understandable
and provides the information necessary for shareholders to assess
the group’s performance, business model and strategy.
Website publication
The directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the company’s website in accordance
with legislation in the United
Kingdom governing the preparation and dissemination of
financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the company’s
website is the responsibility of the directors. The directors’
responsibility also extends to the ongoing integrity of the
financial statements contained therein.
Directors’ responsibilities pursuant
to DTR4
The directors confirm to the best of their knowledge:
• the group financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the
group.
• the annual report includes a fair review of the development
and performance of the business and the financial position of the
group and the parent company, together with a description or the
principal risks and uncertainties that they face.
Independent auditor’s report
To the members of Bisichi Mining
PLC
Opinion
We have audited the financial statements of Bisichi Mining Plc
(the ‘parent company’) and its subsidiaries (the ‘group’) for the
year ended 31 December 2017 which
comprise the consolidated income statement, the consolidated
statement of other comprehensive income, the consolidated balance
sheet, the consolidated statement of changes in shareholders’
equity, the consolidated cash ?ow statement, the parent company
balance sheet, the parent company statement of changes in equity
and notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and, as regards the parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion the financial statements:
- give a true and fair view of the state of the group’s and of
the parent company’s affairs as at 31
December 2017 and of the group’s profit for the year then
ended;
- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act 2006; and
- the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006; and, as regards the
group financial statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group
and company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going
concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
- the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is not appropriate;
or
- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the group’s or the parent company’s ability to continue
to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are
authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
The following key audit matters were identified for the period
under review:
- The risk that estimates and judgments in the life of mine model
may be inappropriate and mining assets require impairment.
- The risk that investment property valuations are
inappropriate.
- The risk that judgments, estimates and disclosure
associated with the carrying value of Ezimbokedwini and impairment
charges are inappropriate
Key Audit Matter |
How the matter was addressed in
our audit |
The risk that estimates and judgments in the life of mine
model may be inappropriate and mining assets require
impairment.
The mining assets amounted to £8.6m as at 31 December 2017 (2016:
£8.5m) and relate to the South African mining operations. These
assets represent a significant part of the Group’s balance sheet
(See note 11).
Management performed an impairment assessment based on the Board
approved Life of Mine plan at 31 December 2017 as detailed in the
Key Judgements and Estimates note.
The assessment by management of inputs to the Life of Mine plan
requires significant judgment and estimate, including determination
of forecast coal prices, production, coal reserves and costs
These factors caused this area to be a significant focus for our
audit. |
We have
evaluated management’s discounted cash flow impairment assessment,
including the underlying Life of Mine plan. In doing so, we
critically assessed key inputs to the model including forecast coal
prices, exchange rates, production, costs and the discount
rate. This included assessment compared to empirical data and
trends, pricing information and market data.
In respect of the coal reserves included in the model, we reviewed
the independent Competent Person’s Report and held discussions with
the Competent Person. In relying on the Competent Person we
assessed their independence and competence.
We performed sensitivity analysis on the impairment model in
respect of factors such as pricing, costs, yields, exchange rates
and the discount rate.
We evaluated the disclosures in the Key Judgements and Estimates
note based on our audit procedures. |
Our findings
Our work on the impairment test supported management’s conclusion
that no impairment exists to be appropriate. We found the key
assumptions to be balanced and appropriately considered by
management and the disclosures in the Key Judgements and Estimates
note to be sufficient. |
Key Audit Matter |
How the matter was addressed in
our audit |
The risk that investment property valuations are
inappropriate.
The Group holds investment property at fair value of £13.2m
together with further investment property held at fair value of
£2.6m (100% basis) in the Group’s Dragon Retail Joint Venture
(notes 10 and 13). The assessment of fair value for the property
portfolio requires significant judgement and estimates by the
Directors, including assessment of independent third party
valuations obtained for the portfolio.
Each valuation requires consideration of the individual nature of
the property, its location, its cash flows and comparable market
transactions. The valuation of these properties requires assessment
of the market yield as well as consideration of the current rental
agreements.
Any significant input inaccuracies or unreasonable bases used in
these judgements (such as in respect of estimated rental value and
net initial yield applied) could result in a material
misstatement.
There is also an inherent risk that management may influence
valuation judgments.
Given these factors, this area was considered to be a significant
focus for our audit given the subjective nature of certain
assumptions inherent in each valuation. |
We
obtained an understanding of management’s approach to the valuation
of investment properties.
We reviewed the independent external valuation reports and
confirmed their consistency with the valuations presented in the
financial statements. We met with the group’s independent external
valuers, who valued all of the group’s investment properties, to
understand the assumptions and methodologies used in valuing these
properties, the market evidence supporting the valuation
assumptions and the valuation movements in the period.
We assessed the competency, independence and objectivity of the
independent external valuer which included making inquiries
regarding interests and relationships that may have created a
threat to the valuer’s objectivity.
We used our knowledge and experience to evaluate and challenge the
valuation assumptions, methodologies and the inputs used. This
included establishing our own range of expectations for the
valuation of investment property based on externally available
metrics.
We agreed a sample of key observable valuation inputs supplied to
and used by the external valuer and Directors to information
audited by us, where applicable, or supporting market
documentation. |
Our findings
We found the valuations determined by the group for its investment
properties in note 10 and investment properties included within the
Dragon retain Joint Venture in note 13 to be consistent with the
independent external valuation reports. |
Key Audit Matter |
How the matter was addressed in
our audit |
The risk that
judgments, estimates and disclosure associated with the carrying
value of Ezimbokedweni and impairment charges are
inappropriate.
As at 31 December 2016 the group’s net investment in Ezimbokedweni
Mining (Pty) Limited (“Ezimbokedweni”), an equity accounted joint
venture was £1.8m. The carrying value was dependent upon the
ultimate completion of a sale and purchase agreement to acquire the
Pegasus coal project in South Africa, under which a deposit had
been paid by Ezimbokedweni.
During the year the joint venture was placed into Business Rescue
under the South African Companies Act by the group’s joint venture
partner. The original deposit has been returned to Ezimbokodweni
and as a result, the Board consider there to be no reasonable
prospect of the Pegasus coal project transaction completing.
Further to these developments, the Board performed an impairment
review of the carrying value of the net investment in Ezimbokedwini
and recorded an impairment of the net investment of £1.8m, with any
further movements since 31 December 2016 reflecting foreign
exchange differences.
The assessment of the carrying value, subsequent impairment and
associated disclosure represented a significant focus for our
audit.
Additionally, the tax treatment of this transaction was considered
to be an area of risk of material misstatement. This was also
considered to be an area requiring specialist knowledge and
expertise. |
We will have made
specific inquiries of management and the Board to gain an
understanding of the fact pattern and events during the year
regarding Ezimbokedweni.
We have reviewed minutes of Board meetings, legal documents and
correspondence relating to the joint venture, the Business Rescue
and assessments of the resulting financial position and interests
of the joint venture.
We have assessed the Board’s conclusion that the net investment is
impaired based on the facts and circumstances, including assessment
of the probability of value being recovered from the joint
venture.
We have assessed the tax treatment of the transaction applied by
management in conjunction with our valuation specialists and those
of the component auditor in South Africa.
We have assessed the accounting entries in respect of the
impairment as well as the disclosures in note 13 and the Key
Estimates and Judgments note. |
Our
findings
We consider the judgements made by management relating to the
impairment recorded by the group to be appropriate based on the
developments during the year. We consider the disclosures at note
13 and the Key Estimates and Judgments note to be acceptable. |
Our application of materiality
The materiality level we applied was calculated based on 1% of
total assets reflecting both the significant asset base of the
group and the transitionary phase of mining.
Whilst materiality for the Financial Statements as a whole was
£300,000 (FY 2016: £350,000), each significant component of the
Group was audited to a lower materiality as detailed in the table
below.
Performance materiality is the application of materiality at the
individual account or balance level set at an amount to reduce to
an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole. Performance materiality was
set at £225,000 (2016: £260,000) which represents 75% (2016 75%) of
the above materiality levels.
Materiality |
FY2017 |
FY2016 |
Materiality for the
Financial Statements as a whole |
£300,000 |
£350,000 |
Materiality levels
used for the audits of the significant components of the audit |
£23,000 to
£170,000 |
£15,000 to
£210,000 |
Audit scope
coverage |
100% of
total assets, 100% of revenue and 100% of profit before tax |
We agreed with the Audit Committee that we would report to them
all individual audit differences identified during the course
of our audit in excess of £15,000. We also agreed to report
differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
An overview of the scope of our
audit
Whilst Bisichi Mining Plc is a company listed on the Standard
Segment of the London Stock Exchange, the Group’s operations
principally comprise investment property in the United Kingdom and an operating mine located
in South Africa. We assessed there
to be significant components within the group, comprising the mine
in South Africa, corporate
accounting function and property companies.
We performed a full scope audit of each of the UK property
companies, corporate accounting function and consolidation.
A non-BDO member firm performed a full scope audit of the mine
in South Africa, under our
direction and supervision as group auditors under ISA 600.
As part of our audit strategy, as group auditors:
- Detailed group reporting instructions were sent to the
component auditor, which included the significant areas to be
covered by the audit (including areas that were considered to be
key audit matters as detailed above), and set out the information
required to be reported to the group audit team.
- We performed a review of the component audit files and held
meetings with the component audit team during the planning and
completion phases of their audit.
- The group audit team was actively involved in the direction of
the audits performed by the component auditors for group reporting
purposes, along with the consideration of findings and
determination of conclusions drawn. We performed our own additional
procedures in respect of the significant risk areas that
represented Key Audit Matters in addition to the procedures
performed by the component auditor.
- The remaining non-significant companies within the group were
principally subject to analytical review procedures.
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the
other information. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon. In connection with our audit of the
financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude
that there is a material misstatement of the other information, we
are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report
to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
- the information given in the strategic report and the
directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
- the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to
report by exception
In the light of the knowledge and understanding of the group and
the parent company and its environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
- the parent company financial statements are not in agreement
with the accounting records and returns; or
- certain disclosures of directors’ remuneration specified by law
are not made; or
- we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 46, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company
and the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Other matters which we are required to
address
Following the recommendation of the audit committee, we were
appointed to audit the financial statements for the year ending
31 December 2017 and subsequent
financial periods. The period of total uninterrupted engagement is
30 years, covering the years ending 1987 to 2017.
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting our
audit.
Our audit opinion is consistent with the additional report to
the audit committee.
Ryan Ferguson
(Senior Statutory Auditor)
For and on behalf of BDO LLP
Statutory Auditor
London, United Kingdom
20 April 2018
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
Financial statements
Consolidated income statement
for the year ended 31 December 2017
|
Notes |
2017
Trading
£’000 |
2017
Revaluations
and
impairment
£’000 |
2017
Total
£’000 |
2016
Trading
£’000 |
2016
Revaluations and
impairment
£’000 |
2016
Total
£’000 |
Group revenue |
1 |
37,459 |
- |
37,459 |
22,815 |
- |
22,815 |
Operating costs |
2 |
(31,640) |
- |
(31,640) |
(21,299) |
- |
(21,299) |
Operating profit before depreciation, fair value
adjustments and exchange movements |
|
5,819 |
- |
5,819 |
1,516 |
- |
1,516 |
Depreciation |
2 |
(1,790) |
- |
(1,790) |
(1,785) |
- |
(1,785) |
Operating profit/(loss) before fair value
adjustments and exchange movements |
1 |
4,029 |
- |
4,029 |
(269) |
- |
(269) |
Exchange (losses)/gains |
|
(256) |
- |
(256) |
449 |
- |
449 |
Decrease/increase in value of investment
properties |
3 |
- |
(13) |
(13) |
- |
445 |
445 |
Gain on disposal of other investments |
|
3 |
- |
3 |
- |
- |
- |
Increase in value of other investments |
|
- |
- |
- |
- |
12 |
12 |
Operating profit/(loss) |
1 |
3,776 |
(13) |
3,763 |
180 |
457 |
637 |
Share of profit/(loss) in joint ventures |
12 |
- |
8 |
8 |
30 |
(37) |
(7) |
Write-off of investment in joint venture |
12 |
- |
(1,827) |
(1,827) |
- |
- |
- |
Profit/(loss) before interest and
taxation |
|
3,776 |
(1,832) |
1,944 |
210 |
420 |
630 |
Interest receivable |
|
205 |
- |
205 |
270 |
- |
270 |
Interest payable |
6 |
(664) |
- |
(664) |
(554) |
- |
(554) |
Profit/(loss) before tax |
4 |
3,317 |
(1,832) |
1,485 |
(74) |
420 |
346 |
Taxation |
7 |
(588) |
24 |
(564) |
150 |
(89) |
61 |
Profit/(loss) for the year |
|
2,729 |
(1,808) |
921 |
76 |
331 |
407 |
Attributable to: |
|
|
|
|
|
|
|
Equity holders of the company |
|
2,557 |
(1,808) |
749 |
148 |
331 |
479 |
Non-controlling interest |
26 |
172 |
- |
172 |
(72) |
- |
(72) |
Profit/(loss) for the year |
|
2,729 |
(1,808) |
921 |
76 |
331 |
407 |
Profit per share – basic |
9 |
|
|
7.02p |
|
|
4.48p |
Profit per share – diluted |
9 |
|
|
7.02p |
|
|
4.48p |
Trading gains and losses reflect all the trading activity on
mining and property operations and realised gains from Joint
ventures. Revaluation gains and losses reflects the revaluation of
investment properties and other assets within the group and any
proportion of unrealised gains and losses within Joint Ventures.
The total column represents the consolidated income statement
presented in accordance with IAS 1.
Consolidated statement of other
comprehensive income
for the year ended 31 December 2017
|
2017
£’000 |
2016
£’000 |
Profit for the year |
921 |
407 |
Other comprehensive income/(expense): |
|
|
Items that may be subsequently recycled to the
income statement: |
|
|
Exchange differences on translation of foreign
operations |
91 |
1,106 |
Gain on available for sale investments |
103 |
193 |
Taxation |
(20) |
(13) |
Other comprehensive income for the year net of
tax |
174 |
1,286 |
Total comprehensive income for the year net of
tax |
1,095 |
1,693 |
Attributable to: |
|
|
Equity shareholders |
912 |
1,665 |
Non-controlling interest |
183 |
28 |
|
1,095 |
1,693 |
Consolidated balance sheet
at 31 December
2017
|
Notes |
2017
£’000 |
2016
£’000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Value of investment properties |
10 |
13,245 |
13,245 |
Fair value of head lease |
30 |
152 |
181 |
Investment properties |
|
13,397 |
13,426 |
Mining reserves, plant and equipment |
11 |
8,613 |
8,520 |
Investments in joint ventures accounted for using
equity method |
12 |
874 |
1,321 |
Loan to joint venture |
12 |
- |
1,350 |
Other investments |
12 |
51 |
32 |
Total non-current assets |
|
22,935 |
24,649 |
Current assets |
|
|
|
Inventories |
15 |
828 |
1,721 |
Trade and other receivables |
16 |
6,417 |
7,246 |
Corporation tax recoverable |
|
- |
32 |
Available for sale investments |
17 |
1,050 |
781 |
Cash and cash equivalents |
|
5,327 |
2,444 |
Total current assets |
|
13,622 |
12,224 |
Total assets |
|
36,557 |
36,873 |
|
Notes |
2017
£’000 |
2016
£’000 |
Liabilities |
|
|
|
Current liabilities |
|
|
|
Borrowings |
19 |
(1,288) |
(3,358) |
Trade and other payables |
18 |
(7,381) |
(6,950) |
Current tax liabilities |
|
(356) |
(18) |
Total current liabilities |
|
(9,025) |
(10,326) |
Non-current liabilities |
|
|
|
Borrowings |
19 |
(5,872) |
(5,876) |
Provision for rehabilitation |
20 |
(1,349) |
(1,236) |
Finance lease liabilities |
30 |
(152) |
(181) |
Deferred tax liabilities |
22 |
(2,485) |
(2,248) |
Total non-current liabilities |
|
(9,858) |
(9,541) |
Total liabilities |
|
(18,883) |
(19,867) |
Net assets |
|
17,674 |
17,006 |
Equity |
|
|
|
Share capital |
23 |
1,068 |
1,068 |
Share premium account |
|
258 |
258 |
Translation reserve |
|
(1,671) |
(1,751) |
Available for sale reserve |
|
143 |
60 |
Other reserves |
24 |
683 |
683 |
Retained earnings |
|
16,661 |
16,339 |
Total equity attributable to equity
shareholders |
|
17,142 |
16,657 |
Non-controlling interest |
26 |
532 |
349 |
Total equity |
|
17,674 |
17,006 |
These financial statements were approved and authorised for
issue by the board of directors on 20 April
2018 and signed on its behalf by:
A R
Heller
G J
Casey
Company Registration No. 112155
Director
Director
Consolidated statement of changes in shareholders’
equity
for the year ended 31 December 2017
|
Share
capital
£’000 |
Share
Premium
£’000 |
Translation
reserves
£’000 |
Available-
for-sale reserves
£’000 |
Other
reserves
£’000 |
Retained
earnings
£’000 |
Total
£’000 |
Non-
controlling
interest
£’000 |
Total
equity
£’000 |
Balance at 1 January 2016 |
1,068 |
258 |
(2,757) |
(120) |
574 |
16,287 |
15,310 |
321 |
15,631 |
Revaluation and impairments |
- |
- |
- |
- |
- |
331 |
331 |
- |
331 |
Trading |
- |
- |
- |
- |
- |
148 |
148 |
(72) |
76 |
Profit/(loss) for the year |
- |
- |
- |
- |
- |
479 |
479 |
(72) |
407 |
Other comprehensive expense |
- |
- |
1,006 |
180 |
- |
- |
1,186 |
100 |
1,286 |
Total comprehensive expense for the year |
- |
- |
1,006 |
180 |
- |
479 |
1,665 |
28 |
1,693 |
Dividend (note 8) |
- |
- |
- |
- |
- |
(427) |
(427) |
- |
(427) |
Share options charge |
- |
- |
- |
- |
109 |
- |
109 |
- |
109 |
Balance at 1 January 2017 |
1,068 |
258 |
(1,751) |
60 |
683 |
16,339 |
16,657 |
349 |
17,006 |
Revaluation and impairments |
- |
- |
- |
- |
- |
(1,808) |
(1,808) |
- |
(1,808) |
Trading |
- |
- |
- |
- |
- |
2,557 |
2,557 |
172 |
2,729 |
Profit/(loss) for the year |
- |
- |
- |
- |
- |
749 |
749 |
172 |
921 |
Other comprehensive income |
- |
- |
80 |
83 |
- |
- |
163 |
11 |
174 |
Total comprehensive income for the year |
- |
- |
80 |
83 |
- |
749 |
912 |
183 |
1,095 |
Dividend (note 8) |
- |
- |
- |
- |
- |
(427) |
(427) |
- |
(427) |
Balance at 31 December 2017 |
1,068 |
258 |
(1,671) |
143 |
683 |
16,661 |
17,142 |
532 |
17,674 |
Consolidated cash flow statement
for the year ended 31 December 2017
|
Year ended
31 December
2017
£’000 |
Year ended
31 December
2016
£’000 |
Cash flows from operating
activities |
|
|
Operating profit |
3,763 |
637 |
Adjustments for: |
|
|
Depreciation |
1,790 |
1,785 |
Share based payments |
- |
109 |
Unrealised loss/(gain) on investment properties |
13 |
(445) |
Realised gain on disposal of
other investments |
(3) |
- |
Unrealised gain on other investments |
- |
(12) |
Exchange adjustments |
256 |
(449) |
Cash flow before working
capital |
5,819 |
1,625 |
Change in inventories |
896 |
(258) |
Change in trade and other
receivables |
919 |
224 |
Change in trade and other
payables |
69 |
1,396 |
Cash generated from
operations |
7,703 |
2,987 |
Interest received |
124 |
121 |
Interest paid |
(546) |
(448) |
Income tax paid |
(11) |
(46) |
Cash flow from operating
activities |
7,270 |
2,614 |
Cash flows from investing
activities |
|
|
Acquisition of reserves, property,
plant and equipment |
(1,754) |
(2,859) |
Share of income from joint
ventures |
- |
30 |
Disposal of other investments |
14 |
- |
Acquisition of available for sale
investments |
(196) |
- |
Disposal of non-current asset held
for sale |
- |
1,138 |
Cash flow from investing
activities |
(1,936) |
(1,691) |
Cash flows from financing
activities |
|
|
Borrowings drawn |
23 |
37 |
Borrowings repaid |
(25) |
(131) |
Equity dividends paid |
(427) |
(427) |
Cash flow from financing
activities |
(429) |
(521) |
Net increase in cash and cash
equivalents |
4,905 |
402 |
Cash and cash equivalents at 1
January |
(890) |
(626) |
Exchange adjustment |
50 |
(666) |
Cash and cash equivalents at 31
December |
4,065 |
(890) |
Cash and cash equivalents at 31
December comprise: |
|
|
Cash and cash equivalents as presented in the balance sheet |
5,327 |
2,444 |
Bank overdrafts (secured) |
(1,262) |
(3,334) |
|
4,065 |
(890) |
Group accounting policies
for the year ended 31 December 2017
Basis of accounting
The results for the year ended 31
December 2017 have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. In applying the
group’s accounting policies and assessing areas of judgment and
estimation materiality is applied as detailed on page 44
of the Audit Committee Report. The principal accounting
policies are described below:
The group financial statements are presented in £ sterling
and all values are rounded to the nearest thousand pounds (£000)
except when otherwise stated.
The functional currency for each entity in the group, and for
joint arrangements and associates, is the currency of the country
in which the entity has been incorporated. Details of which country
each entity has been incorporated can be found in Note 14 for
subsidiaries and Note 13 for joint arrangements and associates.
The exchange rates used in the accounts were as follows:
|
£1 Sterling:
Rand |
£1 Sterling:
Dollar |
|
2017 |
2016 |
2017 |
2016 |
Year-end rate |
16.6686 |
16.9472 |
1.35028 |
1.23321 |
Annual average |
17.1540 |
19.9269 |
1.29174 |
1.35477 |
Going concern
The group has prepared cash flow forecasts which demonstrate
that the group has sufficient resources to meet its liabilities as
they fall due for at least the next 12 months.
In South Africa, a structured
trade finance facility for R100million is held by Black Wattle
Colliery (Pty) Limited (“Black Wattle”) with Absa Bank Limited, a
South African subsidiary of Barclays Bank PLC. The facility is
renewable annually at 30 June and is secured against inventory,
debtors and cash that are held in the group’s South African
operations. The Directors do not foresee any reason why the
facility will not continue to be renewed at the next renewal date,
in line with prior periods and based on their banking
relationships. This facility comprises of a R80million revolving
facility to cover the working capital requirements of the group’s
South African operations, and a R20million loan facility to cover
guarantee requirements related to the group’s South African mining
operations.
The directors expect that that the coal market conditions
experienced by Black Wattle Colliery, its direct mining asset, in
the second half of 2017 and the first quarter of 2018 will be
similar going into the remainder of 2018. The directors therefore
have a reasonable expectation that the mine will achieve positive
levels of cash generation for the group in 2018. As a consequence,
the directors believe that the group is well placed to manage its
South African business risks successfully.
In the UK, a £6 million term loan facility repayable in
December 2019 is held with Santander
Bank PLC. The loan is secured against the company’s UK retail
property portfolio. The amount repayable on the loan at year end
was £5.9million (2016: £5.9million). The debt package has a five
year term and is repayable at the end of the term. The interest
cost of the loan is 2.35% above LIBOR.
If required, the group has sufficient financial resources
available at short notice including cash, available-for-sale
investments and its £2m loan to Dragon Retail Properties Limited
which is repayable on demand. In addition its investment property
assets benefit from long term leases with the majority of its
tenants.
As a result of the banking facilities held as well as the
acceptable levels of profitability and cash generation the group’s
South African operations is expected to achieve for the next 12
months, the Directors believe that the group has adequate resources
to continue in operational existence for the foreseeable future and
that the group is well placed to manage its business risks. Thus
they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
International Financial Reporting
Standards (IFRS)
The Group has adopted all of the new and revised Standards and
Interpretations issued by the International Accounting Standards
Board (“IASB”) that are relevant to its operations and effective
for accounting periods beginning 1 January
2017. An amendment to IAS 7 “Statement of Cash Flows:
Disclosure Initiative”, which is mandatory for 2017, requires
entities to provide disclosures about changes in liabilities
arising from financing activities, including changes from financing
cash flows and non-cash changes (such as foreign exchange gains or
losses). This amendment has been endorsed by the EU. The adoption
of this amendment and other new and revised Standards and
Interpretations had no material effect on the profit or loss or
financial position of the Group.
The Group has not adopted any Standards or Interpretations in
advance of the required implementation dates.
IFRS 15 ‘Revenue from Contracts with Customers’ was issued by
the IASB in May 2014. It is effective
for accounting periods beginning on or after 1 January 2018. The new standard will replace
existing accounting standards, and provides enhanced detail on the
principle of recognising revenue to reflect the transfer of goods
and services to customers at a value which the company expects to
be entitled to receive. The standard also updates revenue
disclosure requirements. The standard was endorsed by the EU on
22 September 2017. The Directors are
continuing to assess the impact of IFRS 15 on the results of the
Group. Whilst management do not envisage a material impact, the
impact of adopting this standard cannot be reliably estimated until
the transition review is complete.
IFRS 9 was published in July 2014
and will be effective for the group from 1
January 2018. The standard was endorsed by the EU on
22 November 2017. It is applicable to
financial assets and financial liabilities, and covers the
classification, measurement, impairment and de-recognition of
financial assets and financial liabilities together with a new
hedge accounting model. IFRS 9 also introduces the expected credit
loss model for impairment of financial assets. Application of the
IFRS 9 impairment model is expected to have minimal impact given
the Group’s credit risk management policies. The Directors are
continuing to assess the impact on the results of the Group and
will complete the assessment during H1 2018.
IFRS 16 ‘Leases’ – IFRS 16 ‘Leases’ was issued by the IASB in
January 2017 and is effective for
accounting periods beginning on or after 1
January 2019. The new standard will replace IAS 17 ‘Leases’
and will eliminate the classification of leases as either operating
leases or finance leases and, instead, introduce a single lessee
accounting model. The standard, which has been endorsed by the EU,
provides a single lessee accounting model, specifying how leases
are recognised, measured, presented and disclosed. The Directors
are currently evaluating the financial and operational impact of
this standard including the application to service contracts at the
mine containing leases. The review of the impact of IFRS 16 will
require an assessment of all leases and the impact of adopting this
standard cannot be reliably estimated until this work is
substantially complete.
The Directors do not anticipate that the adoption of the other
standards and interpretations not listed above will have a material
impact on the accounts. Certain of these standards and
interpretations will, when adopted, require addition to or
amendment of disclosures in the accounts.
We are committed to improving disclosure and transparency and
will continue to work with our different stakeholders to ensure
they understand the detail of these accounting changes. We continue
to remain committed to a robust financial policy
Key judgements and estimates
Areas where key estimates and judgements are considered to have
a significant effect on the amounts recognised in the financial
statements include:
Life of mine and reserves
The directors consider their judgements and estimates
surrounding the life of the mine and its reserves to have
significant effect on the amounts recognised in the financial
statements and to be an area where the financial statements are at
most risk of a significant estimation uncertainty. The life of mine
remaining is currently estimated at 4 years. This life of mine is
based on the groups existing coal reserves and excludes future coal
purchases and coal reserve acquisitions. The group’s estimates of
proven and probable reserves are prepared and subject to assessment
by an independent Competent Person experienced in the field of coal
geology and specifically opencast and pillar coal extraction.
Estimates of coal reserves impact assessments of the carrying value
of property, plant and equipment, depreciation calculations and
rehabilitation and decommissioning provisions. There are numerous
uncertainties inherent in estimating coal reserves and changes to
these assumptions may result in restatement of reserves. These
assumptions include geotechnical factors as well as economic
factors such as commodity prices, production costs and yield.
Depreciation, amortisation of mineral
rights, mining development costs and plant & equipment
The annual depreciation/amortisation charge is dependent on
estimates, including coal reserves and the related life of mine,
expected development expenditure for probable reserves, the
allocation of certain assets to relevant ore reserves and estimates
of residual values of the processing plant. The charge can
fluctuate when there are significant changes in any of the factors
or assumptions used, such as estimating mineral reserves which in
turn affects the life of mine or the expected life of reserves.
Estimates of proven and probable reserves are prepared by an
independent Competent Person. Assessments of
depreciation/amortisation rates against the estimated reserve base
are performed regularly. Details of the depreciation/amortisation
charge can be found in note 11.
Provision for mining rehabilitation
including restoration and de-commissioning costs
A provision for future rehabilitation including restoration and
decommissioning costs requires estimates and assumptions to be made
around the relevant regulatory framework, the timing, extent and
costs of the rehabilitation activities and of the risk free rates
used to determine the present value of the future cash outflows.
The provisions, including the estimates and assumptions contained
therein, are reviewed regularly by management. The group engages an
independent expert to assess the cost of restoration and
decommissioning annually as part of management’s assessment of the
provision. Details of the provision for mining rehabilitation can
be found in note 20.
Impairment
Property, plant and equipment representing the group’s mining
assets in South Africa are
reviewed for impairment at each reporting date. The impairment test
is performed using the approved Life of Mine plan and those future
cash flow estimates are discounted using asset specific discount
rates and are based on expectations about future operations. The
impairment test requires estimates about production and sales
volumes, commodity prices, proven and probable reserves (as
assessed by the Competent Person), operating costs and capital
expenditures necessary to extract reserves in the approved Life of
Mine plan. Changes in such estimates could impact recoverable
values of these assets. Details of the carrying value of property,
plant and equipment can be found in note 11.
The impairment test indicated significant headroom as at
31 December 2017 and therefore no
impairment is considered appropriate. The key assumptions include:
coal prices, including domestic coal prices based on recent pricing
and assessment of market forecasts for export coal; production
based on proven and probable reserves assessed by the independent
Competent Person and yields associated with mining areas based on
assessments by the Competent Person and empirical data. A 9%
reduction in average forecast coal prices or a 9% reduction in
yield would give rise to a breakeven scenario. However, the
directors consider the forecasted yield levels and pricing to be
achievable.
Fair value measurements of
investment properties
An assessment of the fair value of investment properties, is
required to be performed. In such instances, fair value
measurements are estimated based on the amounts for which the
assets and liabilities could be exchanged between market
participants. To the extent possible, the assumptions and inputs
used take into account externally verifiable inputs. However, such
information is by nature subject to uncertainty. The directors note
that the fair value measurement of the investment properties, can
be considered to be less judgemental where external valuers have
been used and as a result of the nature of the underlying assets.
The fair value of investment property is set out in note 10, whilst
the carrying value of investments in joint ventures which
themselves include investment property held at fair value by the
joint venture is set out at note 12.
Write off of Ezimbokodweni joint
venture
During the year the group wrote off its £1.8million (2016:
£1.8million) investment in Ezimbokodweni Mining (Pty) Limited
(“Ezimbokodweni”) made up of a £1.4million loan (2016: £1.4million)
and a £0.4million (2016: £0.4million) joint venture investment.
The carrying value of the investment was dependent upon the
completion of the acquisition of the Pegasus coal project (“the
project”) in South Africa.
Although a proposed sale and purchase agreement had been negotiated
and a deposit paid for the project, the conclusion of the
transaction had been delayed pending the commercial transfer of the
prospecting right from the current owners of the project to
Ezimbokodweni. Although the group has always remained committed to
completing the transaction, previous negotiations to complete the
commercial acquisition of the project had been beset by various
delays outside of its control and at the beginning of 2017, the
current owners of the project notified Ezimbokodweni that they no
longer wished to divest the project. More recently, the group was
notified that an agreement was reached between the current owners
of the project and the directors of Ezimbokodweni for
the deposit for the project to be returned and any further
negotiations with Ezimbokodweni to acquire the project to be
terminated.
Although, a legal claim by the group has been issued against
Ezimbokodweni and its representatives, in order for the group to
recover some of the investment, the board has exercised significant
judgement in considering it to be appropriate to write off the
investment in full in the 2017 year end.
BASIS of consolidation
The group accounts incorporate the accounts of Bisichi Mining
PLC and all of its subsidiary undertakings, together with the
group’s share of the results of its joint ventures. Non-controlling
interests in subsidiaries are presented separately from the equity
attributable to equity owners of the parent company. On acquisition
of a non-wholly owned subsidiary, the non-controlling shareholders’
interests are initially measured at the non-controlling interests’
proportionate share of the fair value of the subsidiaries net
assets. Thereafter, the carrying amount of non-controlling
interests is the amount of those interests at initial recognition
plus the non-controlling interests’ share of subsequent changes in
equity. For subsequent changes in ownership in a subsidiary that do
not result in a loss of control, the consideration paid or received
is recognised entirely in equity.
The definition of control assumes the simultaneous fulfilment of
the following three criteria:
- The parent company holds decision-making power over the
relevant activities of the investee,
- The parent company has rights to variable returns from the
investee, and
- The parent company can use its decision-making power to affect
the variable returns.
Investees are analysed for their relevant activities and
variable returns, and the link between the variable returns and the
extent to which their relevant activities could be influenced in
order to ensure the definition is correctly applied.
Revenue
Revenue comprises sales of coal and property rental income.
Revenue is recognised when the customer has a legally binding
obligation to settle under the terms of the contract and has
assumed all significant risks and rewards of ownership.
Revenue is only recognised on individual sales of coal when all
of the significant risks and rewards of ownership have been
transferred to a third party. Export revenue is generally
recognised when the product is delivered to the export terminal
location specified by the customer, at which point the customer
assumes risks and rewards under the contract. Domestic coal
revenues are generally recognised on collection by the customer
from the mine when loaded into transport, where the customer pays
the transportation costs.
Rental income which excludes services charges recoverable from
tenants, is recognised in the group income statement on a
straight-line basis over the term of the lease. This includes the
effect of lease incentives.
Expenditure
Expenditure is recognised in respect of goods and services
received. Where coal is purchased from third parties at point of
extraction the expenditure is only recognised when the coal is
extracted and all of the significant risks and rewards of ownership
have been transferred.
Investment
properties
Investment properties comprise freehold and long leasehold land
and buildings. Investment properties are carried at fair value in
accordance with IAS 40 ‘Investment Properties’. Properties are
recognised as investment properties when held for long-term rental
yields, and after consideration has been given to a number of
factors including length of lease, quality of tenant and covenant,
value of lease, management intention for future use of property,
planning consents and percentage of property leased. Investment
properties are revalued annually by professional external surveyors
and included in the balance sheet at their fair value. Gains or
losses arising from changes in the fair values of assets are
recognised in the consolidated income statement in the period to
which they relate. In accordance with IAS 40, investment properties
are not depreciated. The fair value of the head leases is the net
present value of the current head rent payable on leasehold
properties until the expiry of the lease.
Mining reserves, plant and
equipment
The cost of property, plant and equipment comprises its purchase
price and any costs directly attributable to bringing the asset to
the location and condition necessary for it to be capable of
operating in accordance with agreed specifications. Freehold land
is not depreciated. Other property, plant and equipment is stated
at historical cost less accumulated depreciation. The cost
recognised includes the recognition of any decommissioning assets
related to property, plant and equipment.
Mine reserves and development cost
The purpose of mine development is to establish secure working
conditions and infrastructure to allow the safe and efficient
extraction of recoverable reserves. Depreciation on mine
development is not charged until production commences or the assets
are put to use. On commencement of full commercial production,
depreciation is charged over the life of the associated mine
reserves extractable using the asset on a unit of production basis.
The unit of production calculation is based on tonnes mined as a
ratio to proven and probable reserves and also includes future
forecast capital expenditure. The cost recognised includes the
recognition of any decommissioning assets related to mine
development.
Post production stripping
In surface mining operations, the group may find it necessary to
remove waste materials to gain access to coal reserves prior to and
after production commences. Prior to production commencing,
stripping costs are capitalised until the point where the
overburden has been removed and access to the coal seam commences.
Subsequent to production, waste stripping continues as part of
extraction process as a mining production activity. There are two
benefits accruing to the group from stripping activity during the
production phase: extraction of coal that can be used to produce
inventory and improved access to further quantities of material
that will be mined in future periods. Economic coal extracted is
accounted for as inventory. The production stripping costs relating
to improved access to further quantities in future periods are
capitalised as a stripping activity asset, if and only if, all of
the following are met:
- it is probable that the future economic benefit associated with
the stripping activity will flow to the group;
- the group can identify the component of the ore body for which
access has been improved; and
- the costs relating to the stripping activity associated with
that component or components can be measured reliably.
In determining the relevant component of the coal reserve for
which access is improved, the group componentises its mine into
geographically distinct sections or phases to which the stripping
activities being undertaken within that component are allocated.
Such phases are determined based on assessment of factors such as
geology and mine planning.
The group depreciates deferred costs capitalised as stripping
assets on a unit of production method, with reference the tons
mined and reserve of the relevant ore body component or phase. The
cost is recognised within Mine development costs within the balance
sheet.
Other assets and depreciation
The cost, less estimated residual value, of other property,
plant and equipment is written off on a straight-line basis over
the asset’s expected useful life. This includes the washing plant
and other key surface infrastructure. Residual values and useful
lives are reviewed, and adjusted if appropriate, at each balance
sheet date. Changes to the estimated residual values or useful
lives are accounted for prospectively. Heavy surface mining and
other plant and equipment is depreciated at varying rates depending
upon its expected usage.
The depreciation rates generally applied are:
Mining equipment |
5 – 10 per cent per annum, but shorter of its
useful life or the life of the mine |
Motor vehicles |
25 – 33 per cent per annum |
Office equipment |
10 – 33 per cent per annum |
Provisions
Provisions are recognised when the group has a present
obligation as a result of a past event which it is probable will
result in an outflow of economic benefits that can be reliably
estimated.
A provision for rehabilitation of the mine is initially recorded
at present value and the discounting effect is unwound over time as
a finance cost. Changes to the provision as a result of changes in
estimates are recorded as an increase / decrease in the provision
and associated decommissioning asset. The decommissioning asset is
depreciated in line with the group’s depreciation policy over the
life of mine. The provision includes the restoration of the
underground, opencast, surface operations and de-commissioning of
plant and equipment. The timing and final cost of the
rehabilitation is uncertain and will depend on the duration of the
mine life and the quantities of coal extracted from the
reserves.
Employee benefits
Share based remuneration
The company operates a share option scheme. The fair value of
the share option scheme is determined at the date of grant. This
fair value is then expensed on a straight-line basis over the
vesting period, based on an estimate of the number of shares that
will eventually vest. The fair value of options granted is
calculated using a binomial or Black-Scholes-Merton model. Payments
made to employees on the cancellation or settlement of options
granted are accounted for as the repurchase of an equity interest,
ie as a deduction from equity. Details of the share options in
issue are disclosed in the Directors’ Remuneration Report on page
37 under the heading Share option schemes which is within the
audited part of that report.
Pensions
The group operates a defined contribution pension scheme. The
contributions payable to the scheme are expensed in the period to
which they relate.
Foreign currencies
Monetary assets and liabilities are translated at year end
exchange rates and the resulting exchange rate differences are
included in the consolidated income statement within the results of
operating activities if arising from trading activities, including
inter-company trading balances and within finance cost/income if
arising from financing.
For consolidation purposes, income and expense items are
included in the consolidated income statement at average rates, and
assets and liabilities are translated at year end exchange rates.
Translation differences arising on consolidation are recognised in
other comprehensive income. Foreign exchange differences on
intercompany loans are recorded in other comprehensive income when
the loans are not considered as trading balances and are not
expected to be repaid in the foreseeable future. Where foreign
operations are disposed of, the cumulative exchange differences of
that foreign operation are recognised in the consolidated income
statement when the gain or loss on disposal is recognised.
Transactions in foreign currencies are translated at the
exchange rate ruling on transaction date.
Financial instruments
The group classifies financial instruments, or their component
parts, on initial recognition as a financial asset, a financial
liability or an equity instrument in accordance with the substance
of the contractual arrangement.
Bank loans and overdrafts
Bank loans and overdrafts are included as financial liabilities
on the group balance sheet at the amounts drawn on the particular
facilities net of the unamortised cost of financing. Interest
payable on those facilities is expensed as finance cost in the
period to which it relates.
Finance lease liabilities
Finance lease liabilities arise for those investment properties
held under a leasehold interest and accounted for as investment
property. The liability is initially calculated as the present
value of the minimum lease payments, reducing in subsequent
reporting periods by the apportionment of payments to the
lessor.
Available for sale investments
Financial assets available for sale are measured at fair value.
Any changes in fair value above cost are recognised in other
comprehensive income and accumulated in the available-for-sale
reserve. For any changes in fair value below cost a provision for
impairment is recognised in the profit or loss account.
Other investments classified as non-current available for sale
investments comprise of shares in listed companies and are carried
at fair value.
Trade receivables
Trade receivables do not carry any interest and are stated at
their nominal value as reduced by appropriate allowances for
estimated recoverable amounts as the interest that would be
recognised from discounting future cash payments over the short
payment period is not considered to be material.
Trade payables
Trade payables are not interest bearing and are stated at their
nominal value, as the interest that would be recognised from
discounting future cash payments over the short payment period is
not considered to be material.
Other financial assets and
liabilities
The groups other financial assets and liabilities not disclosed
above are accounted for at amortised cost.
Joint ventures
Investments in joint ventures, being those entities over whose
activities the group has joint control, as established by
contractual agreement, are included at cost together with the
group’s share of post-acquisition reserves, on an equity basis.
Dividends received are credited against the investment. Joint
control is the contractually agreed sharing of control over an
arrangement, which exists only when decisions about relevant
strategic and/or key operating decisions require unanimous consent
of the parties sharing control. Control over the arrangement is
assessed by the group in accordance with the definition of control
under IFRS 10. Loans to joint ventures are classified as
non-current assets when they are not expected to be received in the
normal working capital cycle. Trading receivables and payables to
joint ventures are classified as current assets and
liabilities.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost includes materials, direct labour and overheads
relevant to the stage of production. Cost is determined using the
weighted average method. Net realisable value is based on estimated
selling price less all further costs to completion and all relevant
marketing, selling and distribution costs.
Impairment
Whenever events or changes in circumstance indicate that the
carrying amount of an asset may not be recoverable an asset is
reviewed for impairment. This includes mining reserves, plant and
equipment and net investments in joint ventures. A review involves
determining whether the carrying amounts are in excess of their
recoverable amounts. An asset’s recoverable amount is determined as
the higher of its fair value less costs of disposal and its value
in use. Such reviews are undertaken on an asset-by-asset basis,
except where assets do not generate cash flows independent of other
assets, in which case the review is undertaken on a cash generating
unit basis.
If the carrying amount of an asset exceeds its recoverable
amount an asset’s carrying value is written down to its estimated
recoverable amount (being the higher of the fair value less cost to
sell and value in use) if that is less than the asset’s carrying
amount. Any change in carrying value is recognised in the
comprehensive income statement.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the tax computations, and is accounted for using the balance sheet
liability method. Deferred tax liabilities are generally recognised
for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. In respect of the deferred tax on the revaluation
surplus, this is calculated on the basis of the chargeable gains
that would crystallise on the sale of the investment portfolio as
at the reporting date. The calculation takes account of indexation
on the historical cost of the properties and any available capital
losses.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the group income
statement, except when it relates to items charged or credited
directly to other comprehensive income, in which case it is also
dealt with in other comprehensive income.
Dividends
Dividends payable on the ordinary share capital are recognised
as a liability in the period in which they are approved.
Cash and cash equivalents
Cash comprises cash in hand and on-demand deposits. Cash and
cash equivalents comprises short-term, highly liquid investments
that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value and original
maturities of three months or less. The cash and cash equivalents
shown in the cashflow statement are stated net of bank overdrafts
that are repayable on demand as per IAS 7. This includes the
structured trade finance facility held in South Africa as detailed in note 21. These
facilities are considered to form an integral part of the treasury
management of the group and can fluctuate from positive to negative
balances during the period.
Assets held for sale
Non-current assets, or disposal groups comprising assets and
liabilities, are classified as held-for-sale if it is highly
probable that they will be recovered primarily through sale rather
through continuing use. Such assets, or disposal groups, are
generally measured at the lower of their carrying amount and fair
value less costs of sell. Any impairment loss on a disposal group
is allocated first to goodwill, and then to the remaining assets
and liabilities on a pro rata basis, except that no loss is
allocated to inventories, financial assets, deferred tax assets,
employee benefit assets, investment property which continue to be
measured in accordance with the group’s other accounting
policies.
Impairment losses on initial classification as held-for-sale and
subsequent gains and losses on remeasurement are recognised in
profit or loss. Once classified as held-for-sale, intangible assets
and property, plant and equipment are no longer amortised or
depreciated, and any equity-accounted investment is no longer
equity accounted.
Segmental reporting
For management reporting purposes, the group is organised into
business segments distinguishable by economic activity. The group’s
only business segments are mining activities and investment
properties. These business segments are subject to risks and
returns that are different from those of other business segments
and are the primary basis on which the group reports its segment
information. This is consistent with the way the group is managed
and with the format of the group’s internal financial reporting.
Significant revenue from transactions with any individual customer,
which makes up 10 percent or more of the total revenue of the
group, is separately disclosed within each segment. All coal
exports are sales to coal traders at Richard Bay’s terminal in
South Africa with the risks and
rewards passing to the coal trader at the terminal. Whilst the coal
traders will ultimately sell the coal on the international markets
the Company has no visibility over the ultimate destination of the
coal. Accordingly, the export sales are recorded as South African
revenue.
Notes to the financial statements
for the year ended 31 December 2017
1. SEGMENTAL REPORTING
|
2017 |
Business analysis |
Mining
£’000 |
Property
£’000 |
Other
£’000 |
Total
£’000 |
Significant revenue customer A |
27,528 |
- |
- |
27,528 |
Significant revenue customer B |
7,226 |
- |
- |
7,226 |
Significant revenue customer C |
412 |
- |
- |
412 |
Other revenue |
1,134 |
1,125 |
34 |
2,293 |
Segment revenue |
36,300 |
1,125 |
34 |
37,459 |
Operating (loss)/profit before fair value
adjustments & exchange movements |
3,104 |
897 |
28 |
4,029 |
Revaluation of investments & exchange
movements |
(256) |
(13) |
3 |
(266) |
Operating profit and segment result |
2,848 |
884 |
31 |
3,763 |
Segment assets |
13,500 |
13,803 |
3,050 |
30,353 |
|
|
|
|
|
Unallocated assets |
|
|
|
|
– Non-current assets |
|
|
|
3 |
– Cash & cash equivalents |
|
|
|
5,327 |
Total assets excluding investment in joint
ventures and assets held for sale |
|
|
|
35,683 |
Segment liabilities |
(9,238) |
(2,270) |
(214) |
(11,722) |
Borrowings |
(1,329) |
(5,832) |
- |
(7,161) |
Total liabilities |
(10,567) |
(8,102) |
(214) |
(18,883) |
Net assets |
|
|
|
16,800 |
Non segmental assets |
|
|
|
|
– Investment in joint ventures |
|
|
|
874 |
Net assets as per balance sheet |
|
|
|
17,674 |
Geographic analysis |
United
Kingdom
£’000 |
South
Africa
£’000 |
Total
£’000 |
Revenue |
1,159 |
36,300 |
37,459 |
Operating profit/(loss) and segment result |
854 |
2,909 |
3,763 |
Non-current assets excluding investments |
13,400 |
8,610 |
22,010 |
Total net assets |
13,416 |
4,258 |
17,674 |
Capital expenditure |
13 |
1,741 |
1,754 |
|
2016 |
Business analysis |
Mining
£’000 |
Property
£’000 |
Other
£’000 |
Total
£’000 |
Significant revenue customer A |
14,543 |
- |
- |
14,543 |
Significant revenue customer B |
4,581 |
- |
- |
4,581 |
Significant revenue customer C |
445 |
- |
- |
445 |
Other revenue |
2,134 |
1,084 |
28 |
3,246 |
Segment revenue |
21,703 |
1,084 |
28 |
22,815 |
Operating (loss)/profit before fair value
adjustments & exchange movements |
(1,030) |
736 |
25 |
(269) |
Revaluation of investments & exchange
movements |
449 |
445 |
12 |
906 |
Operating (loss)/profit and segment
result |
(581) |
1,181 |
37 |
637 |
Segment assets |
15,082 |
13,889 |
2,781 |
31,752 |
|
|
|
|
|
Unallocated assets |
|
|
|
|
– Non-current assets |
|
|
|
6 |
– Cash & cash equivalents |
|
|
|
2,444 |
Total assets excluding investment in joint
ventures and assets held for sale |
|
|
|
34,202 |
Segment liabilities |
(8,098) |
(2,320) |
(215) |
(10,633) |
Borrowings |
(3,424) |
(5,810) |
- |
(9,234) |
Total liabilities |
(11,522) |
(8,130) |
(215) |
(19,867) |
Net assets |
|
|
|
14,335 |
Non segmental assets |
|
|
|
|
– Investment in joint ventures |
|
|
|
1,321 |
– Loan to joint venture |
|
|
|
1,350 |
Net assets as per balance sheet |
|
|
|
17,006 |
Geographic analysis |
United
Kingdom
£’000 |
South
Africa
£’000 |
Total
£’000 |
Revenue |
1,112 |
21,703 |
22,815 |
Operating profit/(loss) and segment result |
1,231 |
(595) |
636 |
Non-current assets excluding investments |
13,432 |
8,517 |
21,949 |
Total net assets |
12,291 |
4,715 |
17,006 |
Capital expenditure |
1 |
2,858 |
2,859 |
2. OPERATING COSTS
|
2017
£’000 |
2016
£’000 |
Mining |
25,664 |
16,184 |
Property |
151 |
211 |
Cost of sales |
25,815 |
16,395 |
Administration |
7,615 |
6,689 |
Operating costs |
33,430 |
23,084 |
The direct property costs are: |
|
|
Ground rent |
8 |
10 |
Direct property expense |
130 |
177 |
Bad debts |
13 |
24 |
|
151 |
211 |
Operating costs above include depreciation of £1,790,000 (2016:
£1,785,000).
3. (LOSS)/GAIN ON REVALUATION OF
INVESTMENT PROPERTIES
The reconciliation of the investment surplus to the gain on
revaluation of investment properties in the income statement is set
out below:
|
2017
£’000 |
2016
£’000 |
Investment surplus |
16 |
458 |
Loss on valuation movement in respect of head
lease payments |
(29) |
(13) |
(Loss)/gain on revaluation of investment
properties |
(13) |
445 |
4. PROFIT/(LOSS) BEFORE TAXATION
(Loss)/profit before taxation is arrived at after charging:
|
2017
£’000 |
2016
£’000 |
Staff costs (see note 28) |
6,396 |
5,321 |
Depreciation |
1,790 |
1,785 |
Exchange loss/(gain) |
256 |
(449) |
Fees payable to the company’s auditor for the
audit of the company’s annual accounts |
41 |
40 |
Fees payable to the company’s auditor and its
associates for other services: |
|
|
The audit of the company’s subsidiaries pursuant to
legislation |
10 |
10 |
Audit related services |
1 |
32 |
Non-audit related services |
1 |
- |
The directors consider the auditors were best placed to provide
the above non-audit and audit related services which refer to
regulatory matters. The audit committee reviews the nature and
extent of non-audit services to ensure that independence is
maintained.
5. DIRECTORS’ EMOLUMENTS
Directors’ emoluments are shown in the Directors’ remuneration
report on page 36 which is within the audited part of that
report.
6. INTEREST PAYABLE
|
2017
£’000 |
2016
£’000 |
On bank overdrafts and bank loans |
443 |
395 |
Unwinding of discount |
92 |
78 |
Other interest payable |
129 |
81 |
Interest payable |
664 |
554 |
7. TAXATION
|
2017
£’000 |
2016
£’000 |
|
|
|
(a) Based on the results for the year: |
|
|
Current tax - UK |
231 |
10 |
Current tax - Overseas |
136 |
60 |
Corporation tax – adjustment in respect of prior
year – UK |
(5) |
- |
Current tax |
362 |
70 |
Deferred tax |
202 |
(131) |
Total tax in income statement charge /
(credit) |
564 |
(61) |
The 2016 deferred tax recognised in income of £131,000
includes a credit of £168,000 arising on the correction of an error
in the calculation of deferred tax in 2015 related to the
accounting of a deferred tax liability incorrectly recognised in
respect of management fees. The company adjusted the effect of this
error in its 2016 financial statements by reducing the tax charge
for the year by £168,000 and reducing the associated deferred tax
liability as it was not considered to be material to the current or
prior year financial statements.
(b) Factors affecting tax charge for
the year:
The corporation tax assessed for the year is different from that
at the standard rate of corporation tax in the United Kingdom of 19.25% (2016: 20%).
The differences are explained below:
Profit/(Loss) on ordinary activities before
taxation |
1,485 |
346 |
Tax on profit on ordinary activities at 19.25%
(2016: 20%) |
286 |
69 |
Effects of: |
|
|
Expenses not deductible for tax purposes |
107 |
20 |
Capital gains on disposal |
- |
153 |
Adjustment to tax rate |
201 |
(117) |
Other differences |
(27) |
(32) |
Adjustment in respect of prior years |
(3) |
(154) |
Total tax in income statement (credit) /
charge |
564 |
(61) |
(c) Analysis of United Kingdom and overseas tax:
United Kingdom tax included in
above:
|
2017
£’000 |
2016
£’000 |
Corporation tax |
231 |
10 |
Adjustment in respect of prior years |
(5) |
- |
Current tax |
226 |
10 |
Deferred tax |
(197) |
8 |
|
29 |
18 |
Overseas tax included in above: |
|
|
Current tax |
136 |
60 |
Deferred tax |
399 |
(139) |
|
535 |
(79) |
8. DIVIDENDS PAID
|
2017
Per share |
2017
£’000 |
2016
Per share |
2016
£’000 |
Dividends paid during the year relating to the
prior period |
4.00p |
427 |
4.00p |
427 |
Dividends relating to the current period: |
|
|
|
|
Interim dividend for 2017 paid on 9 February
2018 |
1.00p |
107 |
1.00p |
107 |
Proposed final dividend for 2017 |
3.00p |
320 |
3.00p |
320 |
Proposed special dividend for 2017 |
1.00p |
107 |
- |
- |
|
5.00p |
534 |
4.00p |
427 |
The dividends relating to the current period are not accounted
for until they have been approved at the Annual General Meeting.
The amount, in respect of 2017, will be accounted for as an
appropriation of retained earnings in the year ending 31 December 2018.
9. PROFIT AND DILUTED
PROFIT PER SHARE
Both the basic and diluted profit per share calculations are
based on a profit of £749,000 (2016: £479,000). The basic profit
per share has been calculated on a weighted average of 10,676,839
(2016: 10,676,839) ordinary shares being in issue during the
period. The diluted profit per share has been calculated on the
weighted average number of shares in issue of 10,676,839 (2016:
10,676,839) plus the dilutive potential ordinary shares arising
from share options of nil (2016: nil) totalling 10,676,839 (2016:
10,676,839).
Share options exercisable as at 31
December 2017 do not have a dilutive effect as the average
market price of ordinary shares during the period does not exceed
the exercise price of the options.
10. INVESTMENT PROPERTIES
|
Freehold
£’000 |
Long
Leasehold
£’000 |
Total
£’000 |
Valuation at 1 January 2017 |
10,550 |
2,695 |
13,245 |
Additions |
13 |
- |
13 |
Revaluation |
(13) |
- |
(13) |
Valuation at 31 December 2017 |
10,550 |
2,695 |
13,245 |
|
|
|
|
Valuation at 1 January 2016 |
10,150 |
2,650 |
12,800 |
Revaluation |
400 |
45 |
445 |
Valuation at 31 December 2016 |
10,550 |
2,695 |
13,245 |
Historical cost |
|
|
|
At 31 December 2017 |
5,836 |
728 |
6,564 |
At 31 December 2016 |
5,823 |
728 |
6,551 |
Long leasehold properties are those for which the unexpired term
at the balance sheet date is not less than 50 years. All investment
properties are held for use in operating leases and all properties
generated rental income during the period.
Freehold and Long Leasehold properties were externally
professionally valued at 31 December on an open market basis
by:
|
2017
£’000 |
2016
£’000 |
Carter Towler |
13,245 |
13,245 |
|
|
|
|
The valuations were carried out in accordance with the
Statements of Asset Valuation and Guidance Notes published by The
Royal Institution of Chartered Surveyors.
Each year external valuers are appointed by the Executive
Directors on behalf of the Board. The valuers are selected based
upon their knowledge, independence and reputation for valuing
assets such as those held by the group.
Valuations are performed annually and are performed consistently
across all investment properties in the group’s portfolio. At each
reporting date appropriately qualified employees of the group
verify all significant inputs and review the computational outputs.
Valuers submit their report to the Board on the outcome of each
valuation round.
Valuations take into account tenure, lease terms and structural
condition. The inputs underlying the valuations include market rent
or business profitability, likely incentives offered to tenants,
forecast growth rates, yields, EBITDA, discount rates, construction
costs including any specific site costs (for example section 106),
professional fees, developer’s profit including contingencies,
planning and construction timelines, lease regear costs, planning
risk and sales prices based on known market transactions for
similar properties to those being valued.
Valuations are based on what is determined to be the highest and
best use. When considering the highest and best use a valuer will
consider, on a property by property basis, its actual and potential
uses which are physically, legally and financially viable. Where
the highest and best use differs from the existing use, the valuer
will consider the cost and likelihood of achieving and implanting
this change in arriving at its valuation.
There are often restrictions on Freehold and Leasehold property
which could have a material impact on the realisation of these
assets. The most significant of these occur when planning
permission or lease extension and renegotiation of use are required
or when a credit facility is in place. These restrictions are
factored in the property’s valuation by the external valuer.
IFRS 13 sets out a valuation hierarchy for assets and
liabilities measured at fair value as follows:
Level 1: valuation based on inputs on quoted market
prices in active markets
Level 2: valuation based on inputs other than quoted
prices included within level 1 that maximise the use of observable
data directly or from market prices or indirectly derived from
market prices.
Level 3: where one or more Significant inputs to
valuations are not based on observable market data
The inter-relationship between key unobservable inputs and the
groups’ properties is detailed in the table below:
Class of property Level 3 |
Valuation technique |
Key
unobservable inputs |
Carrying/
fair value
2017
£’000 |
Carrying/
fair value
2016
£’000 |
Range
(weighted
average)
2017 |
Range
(weighted
average)
2016 |
Freehold – external valuation |
Income capitalisation |
Estimated rental
value per sq ft p.a |
10,550 |
10,550 |
£7 – £25
(£18) |
£7 – £27
(£20) |
|
|
Equivalent Yield |
|
|
7.1% – 11.0%
(8.7%) |
7.8% – 11.0%
(8.9%) |
Long leasehold – external valuation |
Income capitalisation |
Estimated rental
value per sq ft p.a |
2,695 |
2,695 |
£8 – £8
(£8) |
£8 – £8
(£8) |
|
|
Equivalent yield |
|
|
7.7% – 7.7%
(7.7%) |
7.6% – 7.6%
(7.6%) |
At 31 December 2017 |
|
|
13,245 |
13,245 |
|
|
There are interrelationships between all these inputs as they
are determined by market conditions. The existence of an increase
in more than one input would be to magnify the input on the
valuation. The impact on the valuation will be mitigated by the
interrelationship of two inputs in opposite directions, for
example, an increase in rent may be offset by an increase in
yield.
The table below illustrates the impact of changes in key
unobservable inputs on the carrying / fair value of the group’s
properties:
|
Estimated rental
value
10% increase or decrease |
Equivalent
yield
25 basis point contraction or expansion |
|
2017
£’000 |
2016
£’000 |
2017
£’000 |
2016
£’000 |
Freehold – external valuation |
1,055 / (1,055) |
1,055 / (1,055) |
331 / (311) |
316 / (298) |
Long Leasehold – external valuation |
270 / (270) |
270 / (270) |
90 / (85) |
92 / (86) |
11. MINING RESERVES, PLANT AND EQUIPMENT
|
Mining
reserves
£’000 |
Mining
equipment and development costs
£’000 |
Motor
vehicles
£’000 |
Office
equipment
£’000 |
Total
£’000 |
Cost at 1 January 2017 |
1,345 |
23,724 |
235 |
146 |
25,450 |
Exchange adjustment |
22 |
447 |
3 |
2 |
474 |
Additions |
- |
1,731 |
- |
10 |
1,741 |
Disposals |
- |
- |
(38) |
- |
(38) |
Cost at 31 December 2017 |
1,367 |
25,902 |
200 |
158 |
27,627 |
|
|
|
|
|
|
Accumulated depreciation at 1 January 2017 |
1,287 |
15,370 |
154 |
119 |
16,930 |
Exchange adjustment |
21 |
308 |
2 |
1 |
332 |
Charge for the year |
1 |
1,763 |
17 |
9 |
1,790 |
Disposals |
- |
- |
(38) |
- |
(38) |
Accumulated depreciation at 31 December
2017 |
1,309 |
17,441 |
135 |
129 |
19,014 |
Net book value at 31 December 2017 |
58 |
8,461 |
65 |
29 |
8,613 |
Cost at 1 January 2016 |
995 |
15,453 |
150 |
120 |
16,718 |
Exchange adjustment |
350 |
5,858 |
47 |
19 |
6,274 |
Additions |
- |
2,814 |
38 |
7 |
2,859 |
Disposals |
- |
(401) |
- |
- |
(401) |
Cost at 31 December 2016 |
1,345 |
23,724 |
235 |
146 |
25,450 |
|
|
|
|
|
|
Accumulated depreciation at 1 January 2016 |
949 |
10,201 |
99 |
95 |
11,344 |
Exchange adjustment |
336 |
3,824 |
28 |
14 |
4,202 |
Charge for the year |
2 |
1,746 |
27 |
10 |
1,785 |
Disposals |
- |
(401) |
- |
- |
(401) |
Accumulated depreciation at 31 December
2016 |
1,287 |
15,370 |
154 |
119 |
16,930 |
Net book value at 31 December 2016 |
58 |
8,354 |
81 |
27 |
8,520 |
12. INVESTMENTS HELD AS NON-CURRENT ASSETS
|
2017
Net investment in joint
ventures
assets
£’000 |
2017
Other
£’000 |
2016
Net investment
in joint
ventures
assets
£’000 |
2016
Other
£’000 |
At 1 January |
1,321 |
36 |
1,198 |
29 |
Share of gain in investment |
- |
19 |
- |
6 |
Exchange adjustment |
(8) |
- |
130 |
1 |
Share of (loss)/gain in joint ventures |
8 |
- |
(7) |
- |
Write-off of investment |
(447) |
- |
- |
- |
Net assets at 31 December |
874 |
55 |
1,321 |
36 |
|
|
|
|
|
Loan to joint venture (Ezimbokodweni): |
|
|
|
|
At 1 January |
1,350 |
- |
900 |
- |
Exchange adjustments |
(16) |
- |
336 |
- |
Additions - interest |
46 |
- |
114 |
- |
Write-off of loan |
(1,380) |
- |
- |
- |
At 31 December |
- |
- |
1,350 |
- |
At 31 December |
874 |
55 |
2,671 |
36 |
|
|
|
|
|
Provision for diminution in value: |
|
|
|
|
At 1 January |
- |
(4) |
- |
(15) |
Exchange adjustment |
- |
- |
- |
(1) |
Write back/(down) of investment |
- |
- |
- |
12 |
At 31 December |
- |
(4) |
- |
(4) |
Net book value at 31 December |
874 |
51 |
2,671 |
32 |
|
2017
£’000 |
2016
£’000 |
Net book value of unquoted investments |
- |
- |
Net book and market value of investments listed on
overseas stock exchanges |
51 |
32 |
|
51 |
32 |
13. JOINT VENTURES
Dragon Retail Properties Limited
The company owns 50% of the issued share capital of Dragon
Retail Properties Limited, an unlisted property investment company.
At year end, the carrying value of the investment held by the group
was £874,000 (2016: £866,000). The remaining 50% is held by
London & Associated Properties
PLC. Dragon Retail Properties Limited is incorporated in
England and Wales and its registered address is 24 Bruton
Place, London, W1J 6NE. It has
issued share capital of 500,000 (2016: 500,000) ordinary shares of
£1 each. No dividends were received during the period.
Ezimbokodweni Mining (Pty) Ltd
The company owned 49% of the issued share capital of
Ezimbokodweni Mining (Pty) Limited (“Ezimbokodweni”), an unlisted
coal exploration and development company incorporated in
South Africa. During the year the
group wrote off its net investment in Ezimbokodweni at a carrying
value of £1,827,000. The write-off included a loan at an amount of
a £1,380,000 as well as an equity investment of £447,000. At year
end, the carrying value of the net investment, as disclosed in
joint venture assets in note 12, is a loan to Ezimbokodweni of £nil
(2016: £1,350,000) and an equity investment of £nil (2016:
£455,000). Refer to page 62 for details regarding the write-off of
the asset.
|
Dragon
50%
£’000 |
Ezimbokodweni
49%
£’000 |
2017
£’000 |
2016
£’000 |
Turnover |
83 |
- |
83 |
86 |
Profit and loss |
|
|
|
|
Profit/(loss) before depreciation, interest and
taxation |
26 |
- |
26 |
12 |
Depreciation and amortisation |
(6) |
- |
(6) |
(13) |
Loss before interest and taxation |
20 |
- |
20 |
(1) |
Interest Income |
68 |
- |
68 |
69 |
Interest expense |
(83) |
- |
(83) |
(85) |
Loss before taxation |
5 |
- |
5 |
(17) |
Taxation |
3 |
- |
3 |
10 |
Loss after taxation |
8 |
- |
8 |
(7) |
Balance sheet |
|
|
|
|
Non-current assets |
1,317 |
- |
1,317 |
2,672 |
Cash and cash equivalents |
46 |
- |
46 |
61 |
Other current assets |
1,218 |
- |
1,218 |
1,165 |
Current borrowings |
- |
- |
- |
- |
Other current liabilities |
(1,062) |
- |
(1,062) |
(2,388) |
Net current assets |
202 |
- |
202 |
(1,162) |
Non-current borrowings |
(609) |
- |
(609) |
(603) |
Other non-current liabilities |
(36) |
- |
(36) |
(41) |
Share of net assets at 31 December |
874 |
- |
874 |
866 |
Reconciliation of net assets to carrying value
of joint venture assets: |
|
|
|
|
Share of net assets at 31 December |
874 |
- |
874 |
866 |
Pre-acquisition costs capitalised |
- |
- |
- |
455 |
Carrying value of joint venture assets at 31
December |
874 |
- |
874 |
1,321 |
14. SUBSIDIARY COMPANIES
The company owns the following ordinary share capital of the
subsidiaries which are included within the consolidated financial
statements:
|
Activity |
Percentage of
share capital |
Registered address |
Country of
incorporation |
Mineral Products Limited |
Share dealing |
100% |
24 Bruton Place, London, W1J6NE |
England
and Wales |
Bisichi (Properties) Limited |
Property |
100% |
24 Bruton Place, London, W1J6NE |
England
and Wales |
Bisichi Northampton Limited |
Property |
100% |
24 Bruton Place, London, W1J6NE |
England
and Wales |
Bisichi Trustee Limited |
Property |
100% |
24 Bruton Place, London, W1J6NE |
England
and Wales |
Urban First (Northampton) Limited |
Property |
100% |
24 Bruton Place, London, W1J6NE |
England
and Wales |
Bisichi Mining (Exploration) Limited |
Holding company |
100% |
24 Bruton Place, London, W1J6NE |
England
and Wales |
Ninghi Marketing Limited |
Dormant |
90.1% |
24 Bruton Place, London, W1J6NE |
England
and Wales |
Bisichi Mining Managements Services Limited |
Dormant |
100% |
24 Bruton Place, London, W1J6NE |
England
and Wales |
Black Wattle Colliery (Pty) Limited |
Coal mining |
62.5% |
Samora Machel Street, Bethal Road,
Middelburg, Mpumalanga, 1050 |
South
Africa |
Bisichi Coal Mining (Pty) Limited |
Coal mining |
100% |
Samora Machel Street, Bethal Road,
Middelburg, Mpumalanga, 1050 |
South
Africa |
Black Wattle Klipfontein (Pty) Limited |
Coal mining |
62.5% |
Samora Machel Street,
Bethal Road,
Middelburg, Mpumalanga, 1050 |
South
Africa |
Amandla Ehtu Mineral Resource
Development (Pty) Limited |
Dormant |
70% |
Samora Machel Street,
Bethal Road,
Middelburg, Mpumalanga, 1050 |
South
Africa |
|
|
|
|
|
|
Details on the non-controlling interest in subsidiaries are
shown under note 26.
15. INVENTORIES
|
2017
£’000 |
2016
£’000 |
Coal |
|
|
Washed |
301 |
1,139 |
Mining Production |
286 |
83 |
Work in progress |
227 |
458 |
Other |
14 |
41 |
|
828 |
1,721 |
16. TRADE AND OTHER RECEIVABLES
|
2017
£’000 |
2016
£’000 |
Amounts falling due within one year: |
|
|
Trade receivables |
3,908 |
4,076 |
Amount owed by joint venture |
2,000 |
2,000 |
Other receivables |
415 |
754 |
Prepayments and accrued income |
94 |
416 |
|
6,417 |
7,246 |
17. AVAILABLE FOR SALE INVESTMENTS
|
2017
£’000 |
2016
£’000 |
Market value of listed Investments: |
|
|
Listed in Great Britain |
1,003 |
721 |
Listed outside Great Britain |
47 |
60 |
|
1,050 |
781 |
Original cost of listed investments |
922 |
737 |
Unrealised surplus / defecit of market value
versus cost |
128 |
44 |
The Directors have reviewed the individual investments for
impairment and do not consider the investments which are below cost
to be impaired.
18. TRADE AND OTHER PAYABLES
|
2017
£’000 |
2016
£’000 |
Trade payables |
3,771 |
3,610 |
Amounts owed to joint ventures |
192 |
192 |
Other payables |
1,402 |
1,422 |
Accruals |
1,787 |
1,493 |
Deferred Income |
229 |
233 |
|
7,381 |
6,950 |
19. FINANCIAL LIABILITIES – BORROWINGS
|
Current |
Non-current |
|
2017
£’000 |
2016
£’000 |
2017
£’000 |
2016
£’000 |
Bank overdraft (secured) |
1,262 |
3,334 |
- |
- |
Bank loan (secured) |
26 |
24 |
5,872 |
5,876 |
|
1,288 |
3,358 |
5,872 |
5,876 |
|
2017
£’000 |
2016
£’000 |
Bank overdraft and loan instalments by reference
to the balance sheet date: |
|
|
Within one year |
1,288 |
3,358 |
From one to two years |
17 |
26 |
From two to five years |
5,855 |
5,850 |
|
7,160 |
9,234 |
Bank overdraft and loan analysis by origin: |
|
|
United Kingdom |
5,832 |
5,810 |
Southern Africa |
1,328 |
3,424 |
|
7,160 |
9,234 |
The United Kingdom bank loans
and overdraft are secured by way of a first charge over the
investment properties in the UK which are included in the financial
statements at a value of £13,245,000. The South African bank loans
are secured by way of a first charge over specific pieces of mining
equipment, inventory and the debtors of the relevant company which
holds the loan which are included in the financial statements at a
value of £6,123,500. No banking covenants were breached by the
group during the year
Consistent with others in the mining and property industry, the
group monitors its capital by its gearing levels. This is
calculated as the total bank loans and overdraft less remaining
cash and cash equivalents as a percentage of equity. At year end
the gearing of the group was calculated as follows:
|
2017
£’000 |
2016
£’000 |
Total bank loans and overdraft |
7,160 |
9,234 |
Less cash and cash equivalents (excluding
overdraft) |
(5,327) |
(2,444) |
Net debt |
1,833 |
6,790 |
Total equity attributable to shareholders of
the parent |
17,209 |
16,657 |
Gearing |
10.7% |
40.8% |
Analysis of the changes in liabilities arising from financing
activities:
|
Bank
borrowings (including
overdraft)
£’000 |
Finance
leases
£’000 |
2017
£’000 |
2016
£’000 |
Balance at 1 January |
9,234 |
181 |
9,415 |
8,401 |
Exchange adjustments |
(4) |
- |
(4) |
854 |
Cash movements excluding exchange
adjustments |
(2,070) |
- |
(2,070) |
173 |
Valuation movements |
- |
(29) |
(29) |
(13) |
Balance at 31 December |
7,160 |
152 |
7,312 |
9,415 |
20. PROVISION FOR REHABILITATION
|
2017
£’000 |
2016
£’000 |
As at 1 January |
1,236 |
847 |
Exchange adjustment |
21 |
311 |
Unwinding of discount |
92 |
78 |
As at 31 December |
1,349 |
1,236 |
21. FINANCIAL INSTRUMENTS
Total financial assets and
liabilities
The group’s financial assets and liabilities are as follows,
representing both the fair value and the carrying value:
|
Loans and
receivables
£’000 |
Financial Liabilities
measured at
amortised cost
£’000 |
Available for sale investments
£’000 |
2017
£’000 |
2016
£’000 |
Cash and cash equivalents |
5,327 |
- |
- |
5,327 |
2,444 |
Current available for sale investments |
- |
- |
1,050 |
1,050 |
781 |
Non-current available for sale investments |
- |
- |
51 |
51 |
32 |
Trade and other receivables |
6,323 |
- |
- |
6,323 |
6,830 |
Bank borrowings and overdraft |
- |
(7,160) |
- |
(7,160) |
(9,234) |
Finance leases |
- |
(152) |
- |
(152) |
(181) |
Other liabilities |
- |
(7,152) |
- |
(7,152) |
(6,735) |
|
11,650 |
(14,464) |
1,101 |
(1,713) |
(6,063) |
Available for sale investments are held at fair value and fall
under level 1 of the fair value hierarchy into which fair value
measurements are recognised in accordance with the levels set out
in IFRS 7. The comparative figures for 2016 fall under the same
category of financial instrument as 2017.
The carrying amount of short term (less than 12 months) trade
receivable and other liabilities approximate their fair values. The
fair value of non-current borrowings in note 19 approximates its
carrying value and was determined under level 2 of the fair value
hierarchy and is estimated by discounting the future contractual
cash flows at the current market interest rates for UK borrowings
and for the South African overdraft facility. The fair value of the
finance lease liabilities in note 30 approximates its carrying
value and was determined under level 2 of the fair value hierarchy
and is estimated by discounting the future contractual cash flows
at the current market interest rates.
Treasury policy
Although no derivative transactions were entered into during the
current and prior year, the group may use derivative transactions
such as interest rate swaps and forward exchange contracts as
necessary in order to help manage the financial risks arising from
the group’s activities. The main risks arising from the group’s
financing structure are interest rate risk, liquidity risk, market
risk, credit risk, currency risk and commodity price risk. There
have been no changes during the year of the main risks arising from
the group’s finance structure. The policies for managing each of
these risks and the principal effects of these policies on the
results are summarised below.
Interest rate risk
Interest rate risk is the risk that the value of a financial
instrument or cashflows associated with the instrument will
fluctuate due to changes in market interest rates. Interest rate
risk arises from interest bearing financial assets and liabilities
that the group uses. Treasury activities take place under
procedures and policies approved and monitored by the Board to
minimise the financial risk faced by the group. Interest bearing
assets comprise cash and cash equivalents which are considered to
be short-term liquid assets and loans to joint ventures. Interest
bearing borrowings comprise bank loans, bank overdrafts and
variable rate finance lease obligations. The rates of interest vary
based on LIBOR in the UK and PRIME in South Africa.
As at 31 December 2017, with other
variables unchanged, a 1% increase or decrease in interest rates,
on investments and borrowings whose interest rates are not fixed,
would respectively change the profit/loss for the year by £82,000
(2016: £56,000). The effect on equity of this change would be an
equivalent decrease or increase for the year of £82,000 (2016:
£56,000).
Liquidity risk
The group’s policy is to minimise refinancing risk. Efficient
treasury management and strict credit control minimise the costs
and risks associated with this policy which ensures that funds are
available to meet commitments as they fall due. As at year end the
group held borrowing facilities in the UK in Bisichi Mining PLC and
in South Africa in Black Wattle
Colliery (Pty) Ltd.
The following table sets out the maturity profile of contractual
undiscounted cashlfows of financial liabilities as at 31
December:
|
2017
£’000 |
2016
£’000 |
Within one year |
9,110 |
10,658 |
From one to two years |
198 |
239 |
From two to five years |
6,054 |
6,277 |
Beyond five years |
105 |
125 |
|
15,467 |
17,299 |
The following table sets out the maturity profile of contractual
undiscounted cashlfows of financial liabilities as at 31 December
maturing within one year:
|
2017
£’000 |
2016
£’000 |
Within one month |
3,824 |
2,119 |
From one to three months |
2,278 |
2,926 |
From four to twelve months |
3,008 |
5,613 |
|
9,110 |
10,658 |
In South Africa, an increased
structured trade finance facility for R100million was signed by
Black Wattle Colliery (Pty) Limited in July
2017 with Absa Bank Limited. The facility is renewable
annually at 30 June and is secured against inventory, debtors and
cash that are held by Black Wattle Colliery (Pty) Limited. The
trade facility, which is repayable on demand, is included in cash
and cash equivalents within the cashflow statement.
This trade facility comprises of a R80million revolving facility
to cover the working capital requirements of the group’s South
African operations, and a R20million loan facility to cover
guarantee requirements related to the group’s South African mining
operations. The interest cost of the loan is at the South African
prime lending rate.
In December 2014, the group signed
a £6 million term loan facility with Santander. The loan is secured
against the group’s UK retail property portfolio. The debt package
has a five year term and is repayable at the end of the term. The
interest cost of the loan is 2.35% above LIBOR.
As a result of the above agreed banking facilities, the
Directors believe that the group is well placed to manage its
liquidity risk.
Credit risk
The group is mainly exposed to credit risk on its cash and cash
equivalents, trade and other receivables and amounts owed by joint
ventures as per the balance sheet. The maximum exposure to credit
risk is represented by the carrying amount of each financial asset
in the balance sheet which at year end amounted to £11,650,000
(2016: £9,274,000). The group’s credit risk is primarily
attributable to its trade receivables. The group had amounts due
from its significant revenue customers at the year end that
represented 93% (2016: 85%) of the trade receivables balance. These
amounts have been subsequently settled.
Trade debtor’s credit ratings are reviewed regularly. The group
only deposits surplus cash with well-established financial
institutions of high quality credit standing. As at year end the
amount of trade receivables held past due date was £24,000 (2016:
£157,000). To date, the amount of trade receivables held past due
date that has not subsequently been settled is £18,000 (2016:
£134,000). Management have no reason to believe that this amount
will not be settled.
Financial assets maturity
On 31 December 2017, cash at bank
and in hand amounted to £5,327,000 (2016: £2,444,000) which is
invested in short term bank deposits maturing within one year
bearing interest at the bank’s variable rates. Cash and cash
equivalents all have a maturity of less than 3 months.
Foreign exchange risk
All trading is undertaken in the local currencies except for
certain export sales which are invoiced in dollars. It is not the
group’s policy to obtain forward contracts to mitigate foreign
exchange risk on these contracts as payment terms are within 15
days of invoice or earlier. Funding is also in local currencies
other than inter-company investments and loans and it is also not
the group’s policy to obtain forward contracts to mitigate foreign
exchange risk on these amounts. During 2017 and 2016 the group did
not hedge its exposure of foreign investments held in foreign
currencies.
The directors consider there to be no significant risk from
exchange rate movements of foreign currencies against the
functional currencies of the reporting companies within the group,
excluding inter-company balances. The principle currency risk to
which the group is exposed in regard to inter-company balances is
the exchange rate between Pounds sterling and South African Rand.
It arises as a result of the retranslation of Rand denominated
inter-company trade receivable balances held within the UK which
are payable by South African Rand functional currency
subsidiaries.
Based on the group’s net financial assets and liabilities as at
31 December 2017, a 25% strengthening
of Sterling against the South African Rand, with all other
variables held constant, would decrease the group’s profit after
taxation by £34,000 (2016: £435,000). A 25% weakening of Sterling
against the South African Rand, with all other variables held
constant would increase the group’s profit after taxation by
£56,000 (2016: £725,000).
The 25% sensitivity has been determined based on the average
historic volatility of the exchange rate for 2016 and 2017.
The table below shows the currency profiles of cash and cash
equivalents:
|
2017
£’000 |
2016
£’000 |
Sterling |
3,402 |
1,717 |
South African Rand |
1,923 |
725 |
US Dollar |
2 |
2 |
|
5,327 |
2,444 |
Cash and cash equivalents earn interest at rates based on LIBOR
in Sterling and Prime in Rand.
The tables below shows the currency profiles of net monetary
assets and liabilities by functional currency of the group:
2017: |
Sterling
£’000 |
South
African
Rands
£’000 |
Sterling |
(832) |
- |
South African Rand |
54 |
(1,304) |
US Dollar |
13 |
- |
|
(765) |
(1,304) |
2016: |
Sterling
£’000 |
South
African
Rands
£’000 |
Sterling |
(2,522) |
- |
South African Rand |
36 |
(2,262) |
US Dollar |
35 |
- |
|
(2,451) |
(2,262) |
22. DEFERRED TAXATION
|
2017
£’000 |
2016
£’000 |
As at 1 January |
2,248 |
2,002 |
Recognised in income |
202 |
(131) |
Recognised in comprehensive income |
- |
13 |
Exchange adjustment |
35 |
364 |
As at 31 December |
2,485 |
2,248 |
The deferred tax balance comprises the
following: |
|
|
Revaluation of properties |
691 |
715 |
Capital allowances |
2,389 |
2,361 |
Short term timing difference |
(513) |
(184) |
Unredeemed capital deductions |
(80) |
(642) |
Losses and other deductions |
(2) |
(2) |
|
2,485 |
2,248 |
Refer to note 7 for details of adjustments in respect of the
prior year deferred tax in the current year.
23. SHARE CAPITAL
|
2017
£’000 |
2016
£’000 |
Authorised: 13,000,000 ordinary shares of 10p
each |
1,300 |
1,300 |
Allotted and fully paid:
|
2017
Number of
ordinary
shares |
2016
Number of
ordinary
shares |
2017
£’000 |
2016
£’000 |
At 1 January and outstanding at 31 December |
10,676,839 |
10,676,839 |
1,068 |
1,068 |
24. OTHER RESERVES
|
2017
£’000 |
2016
£’000 |
Equity share options |
597 |
597 |
Net investment premium on share capital in joint
venture |
86 |
86 |
|
683 |
683 |
25. SHARE BASED PAYMENTS
Details of the share option scheme are shown in the Directors’
remuneration report on page 37 under the heading Share option
schemes which is within the audited part of this report. Further
details of the share option schemes are set out below.
The Bisichi Mining PLC Unapproved Option Schemes:
Year of grant |
Subscription
price per share |
Period
within
which options
exercisable |
Number of share
for which options
outstanding at
31 December 2016 |
Number of
share options
lapsed
during year |
Number of share
for which options
outstanding at
31 December 2017 |
2010 |
202.5p |
Aug 2013 – Aug
2020 |
80,000 |
- |
80,000 |
2016 |
87.0p |
Sep 2015 – Sep
2025 |
300,000 |
- |
300,000 |
On the 5 February 2018 the company
entered into an agreement with G.Casey to surrender the 80,000
options which were granted in 2010. The aggregate consideration
paid by the group to effect the cancellation was £1. There are no
performance or service conditions attached to 2015 options which
are outstanding at 31 December 2017
which vested in 2015.
On 6 February 2018 the company
granted additional options to the following directors of the
company:
- A.Heller 150,000 options at an exercise price of 73.50p per
share.
- G.Casey 230,000 options at an exercise price of 73.50p per
share.
The above options vest on date of grant and are exercisable
within a period of 10 years from date of grant. There are no
performance or service conditions attached to the options.
|
2017
Number |
2017
Weighted
average
exercise price |
2016
Number |
2016
Weighted
average
exercise price |
Outstanding at 1 January |
380,000 |
111.3p |
705,000 |
133.1p |
Lapsed during the year |
- |
- |
(325,000) |
237.5p |
Outstanding at 31 December |
380,000 |
111.3p |
380,000 |
111.3p |
Exercisable at 31 December |
380,000 |
111.3p |
380,000 |
111.3p |
26. NON-CONTROLLING INTEREST
|
2017
£’000 |
2016
£’000 |
As at 1 January |
349 |
321 |
Share of profit/(loss) for the year |
172 |
(72) |
Exchange adjustment |
11 |
100 |
As at 31 December |
532 |
349 |
The non-controlling interest comprises of a 37.5% shareholding
in Black Wattle Colliery (Pty) Ltd. A coal mining company
incorporated in South Africa.
Summarised financial information reflecting 100% of the underlying
subsidiary’s relevant figures, is set out below.
|
2017
£’000 |
2016
£’000 |
Revenue |
36,300 |
21,703 |
Expenses |
(35,150) |
(22,185) |
Profit/(loss) for the year |
1,150 |
(482) |
Other comprehensive Income |
- |
- |
Total comprehensive income for the
year |
1,150 |
(482) |
Balance sheet |
|
|
Non-current assets |
8,613 |
8,516 |
Current assets |
6,747 |
8,600 |
Current liabilities |
(8,652) |
(12,151) |
Non-current liabilities |
(3,155) |
(2,635) |
Net assets at 31 December |
3,553 |
2,330 |
The non-controlling interest relates to the disposal of a 37.5%
shareholding in Black Wattle Colliery (Pty) Ltd in 2010 when the
total issued share capital in Black Wattle Colliery (Pty) Ltd was
increased from 136 shares to 1,000 shares at par of R1 (South
African Rand) through the following shares issue:
- a subscription for 489 ordinary shares at par by Bisichi
Mining (Exploration) Limited increasing the number of shares held
from 136 ordinary shares to a total of 625 ordinary shares;
- a subscription for 110 ordinary shares at par by Vunani Mining
(Pty) Ltd;
- a subscription for 265 “A” shares at par by Vunani Mining
(Pty) Ltd
Bisichi Mining (Exploration) Limited is a wholly owned
subsidiary of Bisichi Mining PLC incorporated in England and Wales.
Vunani Mining (Pty) Ltd is a South African Black Economic
Empowerment company and minority shareholder in Black Wattle
Colliery (Pty) Ltd.
The “A” shares rank pari passu with the ordinary shares save
that they will have no dividend rights until such time as the
dividends paid by Black Wattle Colliery (Pty) Ltd on the ordinary
shares subsequent to 30 October 2008
will equate to R832,075,000.
A non-controlling interest of 15% in Black Wattle Colliery (Pty)
Ltd is recognised for all profits distributable to the 110 ordinary
shares held by Vunani Mining (Pty) Ltd from the date of issue of
the shares (18 October 2010). An
additional non-controlling interest will be recognised for all
profits distributable to the 265 “A” shares held by Vunani Mining
(Pty) Ltd after such time as the profits available for
distribution, in Black Wattle Colliery (Pty) Ltd, before any
payment of dividends after 30 October
2008, exceeds R832,075,000.
27. RELATED PARTY TRANSACTIONS
|
At 31
December |
During the
year |
|
Amounts
owed
to related
party
£’000 |
Amounts
owed
by related
party
£’000 |
Costs
recharged
(to)/by
related
party
£’000 |
Cash paid
(to)/by
related
party
£’000 |
Related party: |
|
|
|
|
London & Associated Properties PLC (note
(a)) |
33 |
- |
138 |
(140) |
Langney Shopping Centre Unit Trust (note (b)) |
- |
- |
- |
- |
Dragon Retail Properties Limited (note (c)) |
147 |
(2,000) |
(180) |
204 |
Ezimbokodweni Mining (Pty) Limited (note (d)) |
- |
- |
(46) |
- |
As at 31 December 2017 |
180 |
(2,000) |
(88) |
64 |
|
|
|
|
|
London & Associated Properties PLC (note
(a)) |
35 |
- |
138 |
(162) |
Langney Shopping Centre Unit Trust (note (b)) |
- |
- |
- |
64 |
Dragon Retail Properties Limited (note (c)) |
123 |
(2,000) |
(174) |
150 |
Ezimbokodweni Mining (Pty) Limited (note (d)) |
- |
(1,350) |
(114) |
- |
As at 31 December 2016 |
158 |
(3,350) |
(150) |
52 |
(a) London &
Associated Properties PLC – London & Associated Properties PLC is a
substantial shareholder and parent company of Bisichi Mining PLC.
Property management, office premises, general management,
accounting and administration services are provided for Bisichi
Mining PLC and its UK subsidiaries.
(b) Langney Shopping Centre Unit Trust – Langney
Shopping Centre Unit Trust is an unlisted property unit trust
incorporated in Jersey. On the 11 March
2016, the company disposed of its investment in Langney
Shopping Centre Unit Trust.
(c) Dragon Retail Properties Limited – (“Dragon”)
is owned equally by the company and London & Associated
Properties PLC. Dragon is accounted as a joint venture and is
treated as a non-current asset investment. During 2012 the company
lent £2million to Dragon at 6.875 per cent annual interest which
has been classified as a trading balance and which is unsecured and
payable on demand.
(d) Ezimbokodweni Mining (Pty) Limited –
Ezimbokodweni Mining is a prospective coal production company based
in South Africa. Ezimbokodweni
Mining (Pty) Limited is a joint venture and a loan to the joint
venture is treated as part of the net investment in the joint
venture. Further details on the net investment in Ezimbokodweni can
be found in note 13.
Details of key management personnel compensation and interest in
share options are shown in the Directors’ Remuneration Report on
pages 36 and 37 under the headings Directors’ remuneration, Pension
schemes and incentives and Share option schemes which is within the
audited part of this report. Refer also to note 25 for details of
IFRS 2 charges. The total employers’ national insurance paid in
relation to the remuneration of key management was £156,000 (2016:
143,000). In 2012 a loan was made to one of the directors, Mr A R
Heller, for £116,000. Interest is payable on the Director’s Loan at
a rate of 6.14 per cent. There is no fixed repayment date for the
Director’s Loan. The loan amount outstanding at year end was
£56,000 (2016: £71,000) and a repayment of £15,000 (2016: £15,000)
was made during the year.
The non-controlling interest to Vunani Limited is shown in note
26. In addition, the group holds an investment in Vunani Limited
classified as non-current available for sale investments with a
fair value of £51,000 (2016: £32,000).
28. EMPLOYEES
|
2017
£’000 |
2016
£’000 |
The average weekly numbers of employees of the
group during the year were as follows: |
|
|
Production |
192 |
185 |
Administration |
15 |
15 |
|
207 |
200 |
Staff costs during the year were as follows: |
|
|
Salaries |
5,993 |
4,864 |
Social security costs |
161 |
148 |
Pension costs |
242 |
200 |
Share based payments |
- |
109 |
|
6,396 |
5,321 |
29. CAPITAL COMMITMENTS
|
2017
£’000 |
2016
£’000 |
Commitments for capital expenditure approved and
contracted for at the year end |
- |
762 |
Share of commitment of capital expenditure in
joint venture |
- |
1,489 |
30. HEAD LEASE COMMITMENTS AND FUTURE PROPERTY LEASE
RENTALS
Present value of head leases on properties
|
Minimum lease
payments |
Present value of
minimum lease
payments |
|
2017
£’000 |
2016
£’000 |
2017
£’000 |
2016
£’000 |
Within one year |
10 |
11 |
10 |
11 |
Second to fifth year |
38 |
45 |
30 |
36 |
After five years |
1,199 |
1,436 |
112 |
134 |
|
1,247 |
1,492 |
152 |
181 |
Discounting adjustment |
(1,095) |
(1,311) |
- |
- |
Present value |
152 |
181 |
152 |
181 |
The Company has one finance lease contract for an investment
property. The remaining term for the leased investment property is
131 years. The annual rent payable is the higher of £7,500 or
6.25% of the revenue derived from the leased assets.
The group has entered into operating leases on its investment
property portfolio consisting mainly of commercial properties.
These leases have terms of between 1 and 68 years. All leases
include a clause to enable upward revision of the rental charge on
an annual basis according to prevailing market conditions.
The future aggregate minimum rentals receivable under
non-cancellable operating leases are as follows:
|
2017
£’000 |
2016
£’000 |
Within one year |
914 |
981 |
Second to fifth year |
2,460 |
2,533 |
After five years |
9,327 |
9,262 |
|
12,701 |
12,776 |
31. CONTINGENT LIABILITIES AND POST BLANCE SHEET EVENTS
Bank guarantees have been issued by the bankers of Black Wattle
Colliery (Pty) Limited on behalf of the company to third parties.
The guarantees are secured against the assets of the company
and have been issued in respect of the following:
|
2017
£’000 |
2016
£’000 |
Rail siding |
64 |
63 |
Rehabilitation of mining land |
1,387 |
1,364 |
Water & electricity |
58 |
57 |
Company balance sheet
at 31 December
2017
|
Notes |
2017
£’000 |
2016
£’000 |
Fixed assets |
|
|
|
Tangible assets |
34 |
48 |
51 |
Investment in joint ventures |
35 |
165 |
847 |
Other investments |
35 |
7,395 |
7,599 |
|
|
7,609 |
8,497 |
Current assets |
|
|
|
Debtors – amounts due within one year |
36 |
3,471 |
3,253 |
Debtors – amounts due in more than one year |
36 |
- |
843 |
Bank balances |
|
2,129 |
1,118 |
|
|
5,599 |
5,214 |
Creditors – amounts falling due within one
year |
37 |
(1,406) |
(1,328) |
Net current assets |
|
4,193 |
3,886 |
Total assets less current liabilities |
|
11,802 |
12,383 |
Provision for liabilities and charges |
38 |
(18) |
(18) |
Net assets |
|
11,784 |
12,365 |
Capital and reserves |
|
|
|
Called up share capital |
23 |
1,068 |
1,068 |
Share premium account |
|
258 |
258 |
Available for sale reserve |
|
25 |
6 |
Other reserves |
|
598 |
598 |
Retained earnings |
32 |
9,835 |
10,435 |
Shareholders’ funds |
|
11,784 |
12,365 |
The loss for the financial year, before dividends, was £173,000
(2016: loss of £224,000)
The company financial statements were approved and authorised
for issue by the board of directors on 20
April 2018 and signed on its behalf by:
A R Heller
G J Casey
Company Registration No. 112155
Director
Director
Company statement of changes in equity
for the year ended 31 December 2017
|
Share
capital
£’000 |
Share
premium
£’000 |
Available for sale reserve
£’000 |
Other
reserve
£’000 |
Retained
earnings
£’000 |
Shareholders
funds
£’000 |
Balance at 1 January 2016 |
1,068 |
258 |
- |
489 |
11,086 |
12,901 |
Dividend paid |
- |
- |
- |
- |
(427) |
(427) |
Share option charge |
- |
- |
- |
109 |
- |
109 |
Profit and total comprehensive income for the
year |
- |
- |
6 |
- |
(224) |
(218) |
Balance at 1 January 2017 |
1,068 |
258 |
6 |
598 |
10,435 |
12,365 |
Dividend paid |
- |
- |
- |
- |
(427) |
(427) |
Profit and total comprehensive income for the
year |
- |
- |
19 |
- |
(173) |
(154) |
Balance at 31 December 2017 |
1,068 |
258 |
25 |
598 |
9,835 |
11,784 |
Company accounting policies
for the year ended 31 December
2017
The following are the main accounting policies of the
company:
Basis of preperation
The financial statements have been prepared in accordance with
Financial Reporting Standard 100 Application of Financial Reporting
Requirements and Financial Reporting Standard 101 Reduced
Disclosure Framework. The principal accounting policies adopted in
the preparation of the financial statements are set out below.
The financial statements have been prepared on a historical cost
basis, except for the revaluation of investment property and
certain financial instruments.
Disclosure exemptions adopted
In preparing these financial statements the company has taken
advantage of all disclosure exemptions conferred by FRS 101 as well
as disclosure exemptions conferred by IFRS 2, 7 and 13.
Therefore these financial statements do not include:
- certain comparative information as otherwise required by EU
endorsed IFRS;
- certain disclosures regarding the company’s capital;
- a statement of cash flows;
- the effect of future accounting standards not yet adopted;
- the disclosure of the remuneration of key management personnel;
and
- disclosure of related party transactions with the company’s
wholly owned subsidiaries.
In addition, and in accordance with FRS 101, further disclosure
exemptions have been adopted because equivalent disclosures are
included in the company’s Consolidated Financial Statements.
Dividends received
Dividends are credited to the profit and loss account when
received.
Depreciation
Provision for depreciation on tangible fixed assets is made in
equal annual instalments to write each item off over its useful
life. The rates generally used are:
Motor vehicles 25 –
33 per cent
Office equipment 10 – 33 per cent
Joint ventures
Investments in joint ventures, being those entities over whose
activities the group has joint control as established by
contractual agreement, are included at cost, less impairment.
Other Investments
Investments of the company in subsidiaries are stated in the
balance sheet as fixed assets at cost less provisions for
impairment.
Other investments comprising of shares in listed companies are
classified as non-current available for sale investments and are
carried at fair value. Any changes in fair value above cost are
recognised in other comprehensive income and accumulated in the
available-for-sale reserve. For any changes in fair value below
cost a provision for impairment is recognised in the profit or loss
account.
Foreign currencies
Monetary assets and liabilities expressed in foreign currencies
have been translated at the rates of exchange ruling at the balance
sheet date. All exchange differences are taken to the profit and
loss account.
Financial instruments
Details on the group’s accounting policy for financial
instruments can be found on page 64.
Deferred taxation
Details on the group’s accounting policy for deferred taxation
can be found on page 65.
Leased assets and obligations
All leases are “Operating Leases” and the annual rentals are
charged to the profit and loss account on a straight line basis
over the lease term. Rent free periods or other incentives received
for entering into a lease are accounted for over the period of the
lease so as to spread the benefit received over the lease term.
Pensions
Details on the group’s accounting policy for pensions can be
found on page 64.
Share based remuneration
Details on the group’s accounting policy for share based
remuneration can be found on page 64. Details of the share options
in issue are disclosed in the directors’ remuneration report on
page 37 under the heading share option schemes which is within the
audited part of this report.
32. PROFIT & LOSS ACCOUNT
A separate profit and loss account for Bisichi Mining PLC has
not been presented as permitted by Section 408(2) of the Companies
Act 2006. The loss for the financial year, before dividends, was
£173,000 (2016: loss of £224,000)
Details of share capital are set out in note 23 of the group
financial statements and details of the share options are shown in
the Directors’ Remuneration Report on page 37 under the heading
Share option schemes which is within the audited part of this
report and note 25 of the group financial statements.
33. DIVIDENDS
Details on dividends can be found in note 8 in the group
financial statements.
34. TANGIBLE FIXED ASSETS
|
Leasehold
Property
£’000 |
Motor
vehicles
£’000 |
Office
equipment
£’000 |
Total
£’000 |
Cost at 1 January 2017 |
45 |
37 |
67 |
149 |
Revaluation |
- |
(37) |
- |
(37) |
Cost at 31 December 2017 |
45 |
- |
67 |
112 |
|
|
|
|
|
Accumulated depreciation at 1 January 2017 |
- |
37 |
61 |
98 |
Charge for the year |
- |
- |
3 |
3 |
Accumulated depreciation at 31 December 2017 |
- |
37 |
64 |
101 |
Net book value at 31 December 2017 |
45 |
- |
3 |
48 |
Net book value at 31 December 2016 |
45 |
- |
6 |
51 |
Leasehold property consists of a single unit with a long
leasehold tenant. The term remaining on the lease is 42 years.
35. INVESTMENTS
|
Joint
ventures
shares
£’000 |
Shares in subsidiaries
£’000 |
Loans
£’000 |
Other
investments
£’000 |
Total
£’000 |
Net book value at 1 January 2017 |
847 |
6,356 |
1,211 |
32 |
7,599 |
Repaid during year |
- |
- |
(223) |
- |
(223) |
Write-off of investment |
(682) |
- |
- |
- |
- |
Unrealised surplus of market value versus
cost |
- |
- |
- |
19 |
19 |
Net book value at 31 December 2017 |
165 |
6,356 |
988 |
51 |
7,395 |
|
|
|
|
|
|
During the year, the company wrote off its investment in
Ezimbokodweni Mining (Pty) Ltd. Further information relating to the
write down of Ezimbokodweni Mining (Pty) Ltd can be found in Note
13.
Investments in subsidiaries are detailed in note 14. In the
opinion of the directors the aggregate value of the investment in
subsidiaries is not less than the amount shown in these financial
statements.
Other investments comprise £52,000 (2016: £32,000) shares.
36. DEBTORS
|
2017
£’000 |
2016
£’000 |
Amounts due within one year: |
|
|
Amounts due from subsidiary undertakings |
1,289 |
1,006 |
Trade receivables |
16 |
7 |
Other debtors |
78 |
89 |
Joint venture |
2,000 |
2,070 |
Prepayments and accrued income |
88 |
81 |
|
3,471 |
3,253 |
|
|
|
Amounts due in more than one year: |
|
|
Amounts due from subsidiary undertakings |
- |
834 |
37. CREDITORS
|
2017
£’000 |
2016
£’000 |
Amounts falling due within one year: |
|
|
Amounts due to subsidiary undertakings |
279 |
359 |
Joint venture |
192 |
192 |
Current taxation |
123 |
- |
Other taxation and social security |
38 |
26 |
Other creditors |
659 |
592 |
Accruals and deferred income |
115 |
159 |
|
1,406 |
1,328 |
|
|
|
38. PROVISIONS FOR LIABILITIES
|
2017
£’000 |
2016
£’000 |
Deferred taxation: |
|
|
Balance at 1 January |
18 |
182 |
Provision |
- |
(164) |
Transfer |
- |
- |
|
18 |
18 |
39. RELATED PARTY TRANSACTIONS
|
At 31 December |
During the
year |
At 31 December |
Amounts owed
by related party
£’000 |
Costs recharged /
accrued (to)/ by related party
£’000 |
Cash paid (to)/ by
related party
£’000 |
Related party: |
|
|
|
Black Wattle Colliery (Pty) Ltd (note (a)) |
(165) |
(999) |
2,768 |
Ninghi Marketing Limited (note (b)) |
(102) |
- |
- |
As at 31 December 2017 |
(267) |
(999) |
2,768 |
Black Wattle Colliery (Pty) Ltd (note (a)) |
(1,934) |
(1,421) |
644 |
Ninghi Marketing Limited (note (b)) |
(102) |
- |
- |
As at 31 December 2016 |
(2,036) |
(1,421) |
644 |
(a)
Black Wattle Colliery (Pty) Ltd – Black Wattle Colliery
(Pty) Ltd is a coal mining company based in South Africa.
(b)
Ninghi Marketing Limited – Ninghi Marketing Limited is a
dormant coal marketing company incorporated in England & Wales.
Black Wattle Colliery (PTY) Ltd and NInghi Marketing Limited are
subsidiaries of the company.
In addition to the above, the company has issued a company
guarantee of R17,000,000 (2016: R17,000,000) (South African Rand)
to the bankers of Black Wattle Colliery (Pty) Ltd in order to cover
bank guarantees issued to third parties in respect of the
rehabilitation of mining land.
A provision of £102,000 has been raised against the amount owing
by Ninghi Marketing Limited in prior years as the company is
dormant.
In 2012 a loan was made to one of the directors, Mr A R Heller,
for £116,000. Further details on the loan can be found in Note 27
of the group financial statements.
Under FRS 101, the company has taken advantage of the exemption
from disclosing transactions with other wholly owned group
companies. Details of other related party transactions are given in
note 27 of the group financial statements.
40. EMPLOYEES
|
2017
£’000 |
2016
£’000 |
The average weekly numbers of employees of the
company during the year were as follows: |
|
|
Directors & administration |
5 |
5 |
|
|
|
Staff costs during the year were as follows: |
|
|
Salaries |
1,227 |
1,125 |
Social security costs |
161 |
148 |
Pension costs |
62 |
65 |
Share based payments |
- |
109 |
|
1,450 |
1,447 |